What do we need to know about this and in what context (or within which topics) is it tested?
It is used to determine tax burden and to calculate effective tax rate what is same ultimately. By statutory tax fillings EBT is the first step for determining tax base.
So you mean tax/EBT=tax burden or effective tax rate? Are there any other useful ratios or equivalence to EBIT, EBITDA etc.
I mean NI/EBT under tax burden as you may find in extended Du Pont equation. Tax expense amount/EBT (or we call it Gro profit here in my homeland) calculates an effective corporate tax rate which often differs from statutory rate by amount of tax permanent differences (deductibles and non deductibles). I don’t understand what you mean for equivalence to EBIT? We are talking about EBT what is not the same.
Ok I’ll check extended Du Pont later.
By equivalence I meant EBT=EBIT(something). Maybe I’m seeing ghosts here.
EBIT or EBITDA cannot be proxy for EBT. The only another way to remember the term is: the difference between accounting determined the total revenues and the total expenses (thus interests, amortization and depreciation are included in this calculation because are concerned in earnings before taxation).
No problem. I hope I contributed to building your mental map.