EBIT stands for "Earnings before Interest and Taxes" (operating income). A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by EBITDA or EBIT), and then determines the optimal use of debt vs. equity. The Capital Structure of a corporation is the way in which that entity finances itself -- by some combination of equity sales, equity options, bonds, and loans. ... A leveraged buyout (or LBO) occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt. ... In accounting, EBITDA stands for Earnings before Interest, Taxes, Depreciation, and Amortization. Which as the name suggests is earnings excluding expenses from depreciation, amortization, interest, and taxes (earnings + ITDA), in the way the usually appear on the income statement, up to down. ...

External links

• operating income Definition (http://www.investorwords.com/3460/operating_income.html)