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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DEPOSITS IN TRANSIT is deposits made to a bank account that have not been credited to the bank statement.

EBIT is Earnings Before Interest and Tax. EBIT is an indicator of a companys financial performance calculated as revenue less expenses excluding tax and interest. It is sometimes referred to as operating earnings.

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