The revenue is $25,000, the cost of goods sold is $11,000, other expen

The revenue is $25,000, the cost of goods sold is $11,000, other expenses (from selling and administration) are $7,000, and depreciation is $1,000. What is the EBIT?

A) $13,000
B) $7,000
C) $6,000
D) Cannot tell because we do not know the interest paid.

ANSWER

Answer: C
Explanation: C) EBIT = Revenue – Cost of Goods Sold – Other Expenses – Depreciation
= $25,000 – $11,000 – $7,000 – $1,000 = $6,000. Interest is not considered when computing the EBIT.