Earnings before interest, taxes, depreciation and amortization is lower than EBIT as long as the company...
Earnings before interest, taxes, depreciation and amortization is lower than EBIT as long as the company has depreciation or amortization expenses.
True or False
Homework Answers
FALSE
We have the below equation of income statement:
Earnings before interest and taxes (EBIT) = Earnings before interest, taxes, depreciation and amortization - Depreciation and / or amortization expenses
From the above equation, we can see that if there are depreciation and amortization expenses, then, they are deducted from earnings before interest, taxes, depreciation and amortization to get EBIT. So, Earnings before interest, taxes, depreciation and amortization is more than EBIT.
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