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What is Earnings Before Tax (EBT)?
Earnings before tax (EBT) is used to look at cash flows after expenses but before taxes. In a world without tax, this is what earnings would look like.
Taking advantage of an advantageous tax-event, or hiring a better CPA, or merging with a company that can reduce the tax implications of some regular transactions, can bring earnings closer to their before-tax amount. Earnings before tax from an accounting standpoint is net income (which is another word for earnings) with taxes added together with it.
EBT helps investors and the company see how healthy the cash flows are, and how earnings sizes-up when compared to debt obligations and so on. There are a few computations that are closely related and used just as often: Earnings Before Interest and Taxes (EBIT) and Earnings Before Interest Taxes Depreciation and Amortization (EBITDA).
Interest refers to interest due on debt, depreciation is of course the reduction of value in hard assets annually, and amortization refers to the amortized principal payments due on debt. Net income (earnings) will be added together with any of the other factors that an accountant or analyst wants.
By taking things apart and putting them back together, a company can reverse-engineer a more successful strategy. Corporations tend to have an effective tax rate right around 34%, so rough estimates for EBT are not hard to do.
What is a ratio call spread?
Ratio call spreads are options strategies where the investor combines purchased calls and short calls at the same expiration
What are Blockchain’s Issues and Limitations?
Blockchain is an emerging technology and arguably one of the next “big things.” As with anything so big and impactful, it comes with a few issues and limitations
What Does Having a Long Position Mean?
A long position in a security means owning shares and having a positive investment balance in a stock, bond or commodity
What is SIBOR?
SIBOR is the primary interbank loan rate quoted in the Asian markets. SIBOR stands for Singapore Interbank Offered Rate
What is defined as a market correction?
A market correction is typically a sharp, sudden decline in stock prices, where they fall in value by around 10% - 20%
What is the Price to Cash Flow Ratio (PCFR)?
The Price to Cash Flow Ratio is a valuation measure that looks at a company’s stock price relative to its cash flow/share
How Much Does it Cost to Prepare a Trust?
The cost of setting up a trust varies depending on the type of trust and its complexity, but generally speaking a trust will cost between a few hundred to a few thousand dollars
Can You Sell a Bond for Less Than the Price You Paid For It?
Yes, if you sell the bond before its maturity, it’s possible that you would have to sell it at a discount. If you bought a $1,000 bond with a 5% coupon,..
What are Accounts Receivable?
Accounts Receivable is part of the Assets on a Balance Sheet, and it details the money due to the company
What is a Hybrid REIT?
A Hybrid REIT blends the two major classes of REITs (Equity REITs and Mortgage REITs) to give the investor increased...