EBT Calculator — Earnings Before Tax (pretax profit & margin)

Understanding the EBT calculator — concept and principle

This calculator works out earnings before tax (EBT), also called pre-tax profit, from operating profit, interest and other non-operating items. It then applies a tax rate to estimate net income, and shows the pretax margin, net interest cost and the DuPont interest and tax burdens. Analysts and business owners use it to see how financing and tax eat into operating profit.

From EBIT to pre-tax profit — with the default inputs: $123,000.

How it is calculated

EBT = EBIT − interest expense + interest income and other non-operating gains − other non-operating losses
Pretax margin = EBT ÷ revenue × 100
Income tax = EBT × tax rate (zero if EBT is negative, a simplification)
Net income = EBT − tax
Interest burden = EBT ÷ EBIT; tax burden = net income ÷ EBT
Net interest cost = interest expense − interest income

The principle

EBT is the last line of the income statement before income tax. Starting from operating profit, it adds and subtracts what happens outside operations, chiefly the cost of borrowing. In the DuPont analysis of return on equity, two ratios capture these steps: the interest burden shows the share of operating profit that survives financing costs, and the tax burden shows the share of pre-tax profit that survives tax. Multiplying them by the EBIT margin gives the net profit margin.

Worked example

Defaults: EBIT 135,000; interest expense 15,000; interest income 3,000; other losses 0; tax rate 21%; revenue 850,000.

EBT = 135,000 − 15,000 + 3,000 − 0 = $123,000.
Pretax margin = 123,000 ÷ 850,000 × 100 = 14.5%.
Tax = 123,000 × 21% = $25,830; net income = $97,170.
Interest burden = 123,000 ÷ 135,000 = 0.911.
Tax burden = 97,170 ÷ 123,000 = 0.79.
Net interest cost = 15,000 − 3,000 = $12,000.

Each point is the calculator re-run with only “Operating profit (EBIT)” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Operating profit (EBIT)	Earnings before tax (EBT)
33,750	$21,750
67,500	$55,500
101,250	$89,250
135,000	$123,000
168,750	$156,750
202,500	$190,500
270,000	$258,000

How to read the result

An interest burden close to 1 means debt costs little relative to operating profit; a low value means much of the profit goes to lenders. The tax burden equals 1 minus the effective tax rate. Comparing the pretax margin across years shows whether profitability changes come from operations or from financing.

Common mistakes

Entering interest income as a negative number; it is entered as a positive gain.
Using the statutory rate when the effective rate is very different.
Forgetting one-off non-operating losses.
Assuming a loss gives a tax refund; here a negative EBT is simply untaxed.

Keep in mind: Real tax depends on many adjustments, credits and loss carry-forwards. The tax line is an approximation, not tax advice.

Frequently asked questions

Is EBT the same as pre-tax income?

Yes. Earnings before tax, pre-tax profit and pre-tax income are the same idea.

What tax rate should I use?

Your expected effective rate if you know it; otherwise the statutory rate as a rough estimate.

How does EBT relate to EBIT?

EBT is EBIT after interest and other non-operating items.

Sources: CFA Institute, "CFA Program Level II Financial Ratio List"

Checked 9 Nov 2026. Pretax margin = earnings before tax but after interest ÷ total revenue; tax burden = net income ÷ EBT; interest burden = EBT ÷ EBIT: CFA Institute, “CFA Program Level II Financial Ratio List” (ratios 17, 25 and 26). Tax at a flat rate: arithmetic.

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