Promoting Democracy in Algeria

Sales And Total Cost Method

The calculation of EBIT the Exchange Portal boersennews.de provides information not only about the main courses and news from the financial sector investors and financial professionals. For assistance, try visiting Hubie Brooks. User can also inform financial glossary and exchanges Advisor on important concepts and topics from the world of finance. If you are unsure how to proceed, check out Rusty Staub. So, for example, the EBIT (earnings before interest and taxes) as important keyword in the Stock Advisor is mentioned. EBIT describes the interest earned minus interest expenses, so the net result excluding interest and taxes. The term is as an operating result and appears related to the profit and loss account of a company.

This approach aims to facilitate international comparability. To calculate EBIT, there are two variants: the total cost method (article 275 par. 2 HGB) and the cost-of-sales method (article 275 par. 3 German commercial code). For the total cost method the calculation is as follows: revenues, plus or minus changes in stocks of finished and unfinished Products. Other workcapitalised, as well as other operating income are added to.

The resulting sum of material costs, personnel expenses and other operating expenses must be deducted from then. Result of this calculation is EBITDA (earnings before interest, taxes, depreciation and amortization). Turn existing depreciation on fixed assets are deducted from this, which finally results in EBIT. When the cost of sales method in turn is calculated as follows: the difference is made In the first step of revenue and production costs. So is the gross profit from the sales. This distribution costs as well as general administrative costs deducted continues. Then follows the addition of other operating income. Finally other operating expenses are subtracted from this result. Result is the EBIT also.

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