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Pankaj Arora

Learner

3134 Points Joined September 2009

Dear All

Please let me know how to calculate EBIT Margin?

Profit & Loss account of Oil and Natural Gas Corporation

------------------- in Rs. Cr. -------------------

	Mar '06	Mar '07	Mar '08	Mar '09	Mar '10

	12 mths	12 mths	12 mths	12 mths	12 mths

Income
Sales Turnover	48,536.43	57,190.17	60,466.48	64,342.28	60,470.18
Excise Duty	546.69	276.73	401.38	338.29	218.41
Net Sales	47,989.74	56,913.44	60,065.10	64,003.99	60,251.77
Other Income	2,499.67	3,107.05	4,228.63	4,085.59	3,615.96
Stock Adjustments	211.58	-19.73	114.11	81.10	118.04
Total Income	50,700.99	60,000.76	64,407.84	68,170.68	63,985.77
Expenditure
Raw Materials	5,662.50	8,177.22	8,424.32	10,905.51	2,431.88
Power & Fuel Cost	195.45	320.28	317.15	270.79	260.38
Employee Cost	3,014.71	3,974.79	5,843.27	4,536.80	5,618.16
Other Manufacturing Expenses	11,305.10	15,616.76	17,184.51	19,578.49	26,652.82
Selling and Admin Expenses	-40.27	-560.70	-2,328.21	-4,470.78	-13,243.69
Miscellaneous Expenses	1,068.25	1,079.27	983.74	1,011.04	947.65
Preoperative Exp Capitalised	0.00	0.00	0.00	0.00	0.00
Total Expenses	21,205.74	28,607.62	30,424.78	31,831.85	22,667.20
	Mar '06	Mar '07	Mar '08	Mar '09	Mar '10

	12 mths	12 mths	12 mths	12 mths	12 mths

Operating Profit	26,995.58	28,286.09	29,754.43	32,253.24	37,702.61
PBDIT	29,495.25	31,393.14	33,983.06	36,338.83	41,318.57
Interest	3,718.44	3,724.81	5,016.88	8,485.40	11,276.89
PBDT	25,776.81	27,668.33	28,966.18	27,853.43	30,041.68
Depreciation	3,852.76	3,292.80	3,915.77	4,355.62	5,242.66
Other Written Off	0.00	0.00	0.00	0.00	0.00
Profit Before Tax	21,924.05	24,375.53	25,050.41	23,497.81	24,799.02
Extra-ordinary items	-122.87	-564.27	607.25	790.68	183.99
PBT (Post Extra-ord Items)	21,801.18	23,811.26	25,657.66	24,288.49	24,983.01
Tax	7,321.43	8,041.02	8,941.85	8,437.78	8,258.73
Reported Net Profit	14,430.78	15,642.92	16,701.65	16,126.32	16,767.56
Total Value Addition	15,543.24	20,430.40	22,000.46	20,926.34	20,235.33
Preference Dividend	0.00	0.00	0.00	0.00	0.00
Equity Dividend	6,416.70	6,630.51	6,844.39	6,844.39	7,058.28
Corporate Dividend Tax	899.94	1,012.51	1,163.20	1,163.20	1,161.56
Per share data (annualised)
Shares in issue (lakhs)	14,259.34	21,388.73	21,388.73	21,388.73	21,388.73
Earning Per Share (Rs)	101.20	73.14	78.09	75.40	78.39
Equity Dividend (%)	450.00	310.00	320.00	320.00	330.00
Book Value (Rs)	378.42	289.52	330.16	368.12	408.08

Replies (2)

RAMESH KUMAR VERMA

CS PURSUING

43853 Points Joined December 2009

EBIT stands for "earnings before income and tax." The EBIT margin is EBIT divided by net revenue. Investors use EBIT margin to see how earnings of the company grow from year to year. Since EBIT does not include interest or tax, it shows how the firm operates. Interest has no bearing on the firm's operation and the effective tax rate can vary from year to year. Therefore, EBIT may be more accurate than net income in determining operational efficiency.

Instructions 1

Determine EBIT. Some companies will disclose EBIT in the notes to their financial statements. If the company does not disclose EBIT, then add back interest expense and tax expense from net income. These accounts are found on the income statement.

For instance, if a company has 500,000 of net income and pays 2,000 in interest expenses and 10,000 in taxes, its EBIT would equal 500,000, plus 2,000 plus 10,000, which is 512,000.

2. Determine the company's net revenue. This information is found on the company's income statement. For example, a company may have 900,000 of net revenue.

3. Divide EBIT by net revenue to determine EBIT margin. In the example above, 512,000 divided by 900,000 equals an EBIT margin of 0.5688, or 56.88 percent.