Earnings before interest and taxes (EBIT)
An indicator of an entity’s financial performance calculated as revenues minus expenses.

Earnings before interest, taxes, depreciation and amortization (EBITDA)
An indicator of an entity’s financial performance calculated as revenues minus expenses (excluding tax, interest, depreciation and amortization expense).

Earnings before taxes (EBT)
An indicator of an entity’s financial performance calculated as revenues minus expenses, before taxes have been paid.

Effective tax rate
A measure of the average tax rate paid by an individual or business entity. To compute the effective tax rate, the actual amount of tax paid is divided by net income before taxes.

EMV
Expected monetary value. A weighted average of the values of the possible outcomes of some action, the weights being the respective possibilities.

Equity method
A method of accounting whereby the investment is initially recorded at cost and subsequently adjusted for the postacquisition change in the investor’s share of net assets of the investee.

Equity ratio
The percentage share of equity in the total assets reported in the statement of financial position. Also called capital ration.

Expected useful life of a long lived asset
The estimated period of time during which an asset is expected to be used in business. Expected useful life is needed for purposes of calculating some types of depreciation.