{"id":28835,"date":"2024-03-19T11:46:17","date_gmt":"2024-03-19T11:46:17","guid":{"rendered":"https:\/\/swoopfunding.com\/us\/uk\/business-glossary\/earnings-before-tax\/"},"modified":"2025-04-24T14:06:01","modified_gmt":"2025-04-24T14:06:01","slug":"earnings-before-tax","status":"publish","type":"business-glossary","link":"https:\/\/swoopfunding.com\/us\/business-glossary\/earnings-before-tax\/","title":{"rendered":"Earnings before tax (EBT)"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><strong>Definition<\/strong><\/h3>\n\n\n\n<p>Earnings before tax (EBT), also known as pre-tax income or profit before tax, is a financial metric used to assess a company&#8217;s profitability before accounting for taxes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What is earnings before tax?<\/strong><\/h3>\n\n\n\n<p>Earnings before tax represents the amount of money a company earns from its core operations before deducting taxes and other non-operating expenses.<\/p>\n\n\n\n<p>Earnings before tax is calculated using the formula:&nbsp;<\/p>\n\n\n\n<p>Earnings before tax = Total <a href=\"https:\/\/swoopfunding.com\/us\/business-glossary\/revenue\/\">revenue<\/a> &#8211; Operating expenses<\/p>\n\n\n\n<p>EBT is a key measure of a company&#8217;s operating performance because it reflects its ability to generate <a href=\"https:\/\/swoopfunding.com\/us\/business-glossary\/profit\/\">profits<\/a> from its core business activities, independent of tax considerations. Furthermore, it allows for comparisons of profitability between companies in different tax jurisdictions or with varying tax structures.&nbsp;<\/p>\n\n\n\n<p>EBT is a key component in financial analysis and is often used in various financial ratios and metrics. For example, it serves as the starting point for calculating <a href=\"https:\/\/swoopfunding.com\/us\/business-glossary\/earnings-per-share-eps\/\">earnings per share (EPS)<\/a>, <a href=\"https:\/\/swoopfunding.com\/us\/business-glossary\/return-on-assets\/\">return on assets (ROA)<\/a>, <a href=\"https:\/\/swoopfunding.com\/us\/business-glossary\/return-on-equity\/\">return on equity (ROE)<\/a>, and other profitability ratios.<\/p>\n\n\n\n<p>For investors, EBT provides valuable insights into a company&#8217;s financial health and its ability to generate profits from core operations. A consistent and growing EBT over time indicates a healthy and sustainable <a href=\"https:\/\/swoopfunding.com\/us\/business-glossary\/business-model\/\">business model<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Example of earnings before tax<\/strong><\/h3>\n\n\n\n<p>Company XYZ generated $1 million in revenue last year. They incurred $600,000 in operating expenses. Their earnings before tax (EBT) can now be calculated:<\/p>\n\n\n\n<p>EBT = $1,000,000 &#8211; $600,000 = 400,000<\/p>\n\n\n\n<p>So, Company XYZ&#8217;s earnings before tax for the year was $400,000. This figure represents the profit generated by the company from its core operations before accounting for taxes.<\/p>\n","protected":false},"author":1,"template":"","class_list":["post-28835","business-glossary","type-business-glossary","status-publish","hentry"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>Definition Earnings before tax (EBT), also known as pre-tax income or profit before tax, is a financial metric used to assess a company&#8217;s profitability before accounting for taxes. What is earnings before tax? Earnings before tax represents the amount of money a company earns from its core operations before deducting taxes and other non-operating expenses. Earnings before tax is calculated using the formula:&nbsp; Earnings before tax = Total revenue &#8211; Operating expenses EBT is a key measure of a company&#8217;s operating performance because it reflects its ability to generate profits from its core business activities, independent of tax considerations. Furthermore,&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"root","url":"https:\/\/swoopfunding.com\/us\/author\/root\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/business-glossary\/28835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/business-glossary"}],"about":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/types\/business-glossary"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/users\/1"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/us\/wp-json\/wp\/v2\/media?parent=28835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}