Ebit Quotes

So not only were the liabilities from Allied’s bankruptcy becoming defined, but the core business was not showing any signs of stress from the scandal. That left valuation. At his $40 per share purchase price, and in contrast to most of the stocks discussed in this book, American Express did not sell for an obvious bargain price. With a $178.4 million market capitalization and $124.1 million enterprise value, the stock sold for 15.8x 1963 earnings, 7.8x EV/1963 EBIT, and 2.3x P/TB. It didn’t look that cheap, and this valuation didn’t include an adjustment for the cost of the salad oil settlement.270

interest cover = EBIT/interest payable

This is the stage of profit at which we have recovered our Operating Expenses, but have yet to pay taxes to the government, interest to the lenders and dividends to the shareholders. This figure is also called PBIT (Profit Before Interest and Tax) or EBIT (Earnings Before Interest and Tax).