Operating profit (EBIT)

EBIT = Earnings Before Interest and Tax. Just take EBITDA and subtract depreciation. This is the cleanest "did the business actually make money from operations?" number on the P&L.

Where it sits

EBITDA                              150
Depreciation & amortization         (-30)
─────────────────────────────────────────
EBIT (operating profit)             120

EBIT is sometimes called Operating Profit or PBIT. They all mean the same thing.

Why prefer EBIT over EBITDA?

EBITDA pretends past investments cost nothing. EBIT corrects for that by subtracting depreciation. So:

Software or services company (low capex, almost no depreciation) → EBITDA ≈ EBIT. The two are interchangeable.
Cement or steel company (massive capex, large depreciation) → EBIT is materially lower than EBITDA. The EBIT margin tells you what's left after the cost of factories that exist.
Telecom tower company - EBITDA can be 50% but EBIT just 15%. The 35% gap is the past capex spread across years.

Operating profit (EBIT)

EBIT = Earnings Before Interest and Tax. Just take EBITDA and subtract depreciation. This is the cleanest "did the business actually make money from operations?" number on the P&L.

Where it sits

EBITDA                              150
Depreciation & amortization         (-30)
─────────────────────────────────────────
EBIT (operating profit)             120

EBIT is sometimes called Operating Profit or PBIT. They all mean the same thing.

Why prefer EBIT over EBITDA?

EBITDA pretends past investments cost nothing. EBIT corrects for that by subtracting depreciation. So:

Software or services company (low capex, almost no depreciation) → EBITDA ≈ EBIT. The two are interchangeable.
Cement or steel company (massive capex, large depreciation) → EBIT is materially lower than EBITDA. The EBIT margin tells you what's left after the cost of factories that exist.
Telecom tower company - EBITDA can be 50% but EBIT just 15%. The 35% gap is the past capex spread across years.