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: 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.
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