Does EBIT Include Income from Investments in Other Firms?
Jaap de Jonge, Management Consultant, Netherlands
EBIT is a measure of a company’s profitability. EBIT can be calculated as Operating Income
(=Revenue minus Operating Expenses) plus Non-Operating Income
- Operating expenses include cost of goods sold, depreciation and amortization, selling, general and administrative expenses and other expenses.
- Non-operating income is the part of a company’s income that was not generated by the company’s core business. That may include income from investments, dividend income etc. Or as you call it income from third party shares and income from participations.
Note that if a company does not have any non-operating income, than EDIT is equal to operating income.