EBIT, or earnings before interest and taxes, is a line item on an income statement that measures a company’s profitability before the impact of taxes and interest payments. It measures the amount of money a firm can generate from its core operations and is often referred to as “operating income” or “operational earnings.” To calculate EBIT, simply subtract cost of goods sold (COGS) from total revenues; other expenses including rent, wages, and utilities are then subtracted from this amount to arrive at EBIT. Generally, the higher the EBIT figure, the more profitable and healthy a business is considered to be.