EBT

EBT stands for ‘Earnings Before Taxes’. Sometimes it is called ‘Profit Before Taxes’ (PBT), ‘pre-tax profit’ or ‘taxable income’ (or your corporate ‘income tax base’). It allows to analyze corporate performance taking into account everything but the efficiency of your corporate income tax optimization systems.

Because EBT includes interest but excludes income taxes in its calculation, you can use it foe benchmarking purposes. In other words, to compare your profitability and operational performance to companies with similar financing structures but in different tax jurisdictions. For example, you might measure your EBT against that of a similarly funded competitor that is located in a different state. Or in a different country.

Also, EBT exists because tax legislation – and therefor expense - is subject to rapid and significant change. Therefore, taking it out of the picture helps investors and top managers get a good idea of changes in a company's profits or earnings from year to year without having to worry about its corporate tax environment.