BASIC EARNINGS POWER Definition

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BASIC EARNINGS POWER (BEP) is useful for comparing firms in different tax situations and with different degrees of financial leverage. This ratio is often used as a measure of the effectiveness of operations. Basic Earning Power measures the basic profitability of Assets because it excludes consideration of interest and tax. This ratio should be examined in conjunction with turnover ratios to help pinpoint potential problems regarding asset management. Formula: EBIT / Total Assets

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FA, dependent upon usage, can mean Fixed Assets, Financial Advisor, Feasibility Analysis, Funds Allocated, Financial Assurance, Financial Agent, Financial Aid, or Factor Analysis.

IMMOVABLE is a. not able to be moved or changed; or, b. assets consisting of land, buildings, or other permanent items.

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