A firm has revenue of $50,000, the cost of goods sold is $23,000, othe

A firm has revenue of $50,000, the cost of goods sold is $23,000, other expenses (from selling and administration) are $14,000, interest expenses are $4,000 and depreciation is $5,000. What is the EBIT?

A) $4,000
B) $8,000
C) $13,000
D) $27,000

ANSWER

Answer: B
Explanation: B) EBIT = Revenue – Cost of Goods Sold – Other Expenses – Depreciation
= $50,000 – $23,000 – $14,000 – $5,000 = $8,000. Interest is not considered when computing the EBIT.