Definition:

Earnings Before Tax or EBT is a measure of a company’s profit before deduction of corporation tax. It can also be called Income Before Taxes.

Example:

A company generates $50,000 of revenue in a month. After operating expenses, depreciation and interest costs are deducted it generates an EBT of $4,000.

It pays 20% tax on $4,000 resulting in Net Income (or Profit after tax) of $3,200.

Why it matters:

EBT is shown in a company’s income statement. Since tax rules vary by country and even for different states / regions, EBT is a more neutral measure of underlying performance.