PBIT (profit before interest and tax)
Profit before interest and tax is profit before finance interest and income tax, used in ratios such as interest cover. The label PBIT is used in older questions and ratio explanations. Identify which income and costs the question includes, then reconcile it to the appropriate presented subtotal. IFRS 18 separately presents profit before financing and income taxes after relevant investing income and expenses.
Worked example
PBIT 120 divided by interest expense 30 gives cover of 4 times.
Common mistake
Do not assume PBIT always equals IFRS 18 operating profit: investing income and other items may differ.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Supporting | September 2026–June 2027 |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| FIA | FFA | Supporting | September 2026–June 2027 |
Related terms
Also called: Profit before interest and tax, PBIT