Earnings before interest and taxes, more commonly referred to as operating income, is a key financial measure used to evaluate a company's profitability. It represents the income generated from the core operations of a business, before taking into account interest expenses and taxes. This metric is important because it allows investors to assess the performance of a company's operations independently from external factors such as financing decisions and tax obligations. By understanding a company's earnings before interest and taxes, investors can gain valuable insights into its financial health and make informed decisions about potential investments.
