EBIT TO INTEREST
CONDITION
| Year : | 2006 |
| Your ratio : | 28.26 |
| Industry Avg : | 2.73 |
| EBIT : | $98,344 |
| Interest : | $3,480 |
GRAPH
EBIT TO INTEREST
Calculation Earnings Before Interest and Taxes provides a measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes. EBIT excludes income and expenditure from unusual, non-recurring or discontinued activities. In the case of a company with minimal depreciation and automization activities, EBIT is watched closely by creditors, Since it represents the amount of cash taht such a company will be able to use to pay off creditors. EBIT is commonly reffered to as operating profit.
This ratio is measure of a firm's ability to meet interest payments. A high ratio may indicate that a borrower would have litle difficulty in meeting the interest obligations of a loan. This ratio also serves as an indicator of a firm's capacity to take on additional debt.
According to your peers, your business appers to be in a strong position from its operations' earning power to effectively meet its debt obligations. If you are considering an acquisition, you may be in good position to proceed. In the case of a comapany with minimal depreciation and amortization activities, EBIT is watched closely by creditors, since it represents the amount of cash that such a comapny will be able to use to pay off creditors, also called operating profit.