PEG Ratio

Unadjusted EBIT for Tecnotree Oyj is calculated as follows:

Earnings Before Taxes [ 12.804 M ]
(+) Net Interest Expense [ 352 T ]
(+) Non Operating Expenses [ 10.656 M ]

(=) Unadjusted EBIT [ 23.812 M ]

Unadjusted EBIT is defined as Earnings before Interest and Taxes including unusual items. It is a commonly used metric in valuation as a proxy for operating profitability. EBIT gives us a clearer picture of profitability when comparing companies with different levels of debt since it excludes interest expense.

Difference in Interest Expense

Two companies that are otherwise similar may have different levels of debt. The company with higher debt will likely have higher interest expense and lower Net Income. Since EBITDA ignores interest expense, it is not directly affected by management’s financing decisions.

Difference in Taxes

The amount of a tax a company pays each year is determined by a wide range of factors that does not always reflect the profitability of the company since the taxes a company is subject to reflects factors like political jurisdictions, past loss carryforwards, research and development tax credits, and depreciation on capital assets to name a few.

Unusual Items

Unusual items consist of income or expenses included in a company’s income statement from events, which are unusual and infrequent in nature.

EBIT is most useful in ratios to benchmark profitability, growth, credit risk, and relative valution. Popular EBIT benchmark metrics include unadjusted ebit margin, unadjusted ebit growth and ev / ebit.