Question

the elements requried in the breakeven EBIT calculation are?

Answer 1

EBIT refers to Earning Before Interest & Taxes.

EBIT is also called operating profit. The profit which obtained after deducting the expenses and depreciation.

EBIT = Sales - Operating expenses – Depreciation

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Operating expenses = Expenses related to produce goods and services (excluding interest expenses)

Operating expenses are raw material cost, rents, salaries and other utilities cost.

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Depreciation expense is noncash expense which is changed to profit.

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Interest costs are EXCLUDED because it is not necessary expenses to obtain operating profit.

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Finally, we get EBIT after providing above.

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EBIT = Sales - Operating expenses - Depreciation