Earnings Before Tax Template
This earnings before tax template shows you how to calculate the earnings before tax using line items in the income statement.
Below is a screenshot of the EBT template:
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Earnings before tax (EBT), or pre-tax income, is the last subtotal found in the income statement Income StatementThe Income Statement is one of a company's core financial statements that shows their profit and loss over a period of time. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non-operating activities.This statement is one of three statements used in both corporate finance (including financial modeling) and accounting.before the penultimate net incomeNet IncomeNet Income is a key line item, not only in the income statement, but in all three core financial statements. While it is arrived at through the income statement, the net profit is also used in both the balance sheet and the cash flow statement. line item. Earnings before tax is found after all deductions have been made against sales revenueSales RevenueSales revenue is the income received by a company from its sales of goods or the provision of services. In accounting, the terms "sales" and "revenue" can be, and often are, used interchangeably, to mean the same thing. Revenue does not necessarily mean cash received.. These deductions include COGS, SG&ASG&ASG&A includes all non-production expenses incurred by a company in any given period. This includes expenses such as rent, advertising, marketing, accounting, litigation, travel, meals, management salaries, bonuses, and more. On occasion, it may also include depreciation expense, depreciationDepreciation ExpenseDepreciation expense is used to reduce the value of plant, property, and equipment to match its use, and wear and tear, over time. Depreciation expense is used to better reflect the expense and value of a long-term asset as it relates to the revenue it generates. and amortization, and interest expense.Interest ExpenseInterest expense arises out of a company that finances through debt or capital leases. Interest is found in the income statement, but can also be calculated through the debt schedule. The schedule should outline all the major pieces of debt a company has on its balance sheet, and calculate interest by multiplying the
Earnings Before Tax Formula
There are three formulas that can be used to calculate Earnings Before Tax (EBT):
- EBT = Sales Revenue – COGS – SG&A – Depreciation and Amortization
- EBT = EBIT – Interest Expense
- EBT = Net Income + Taxes
Earnings Before Tax is used for analyzing the profitability of a company without the impact of its tax regime. This makes companies in different states or countries more comparable, as tax rates may differ significantly across borders. Analysts often prefer to add back taxes so they can have an apples-to-apples comparison of earning power across a wide range of companies.
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