Operating Income (EBIT) - Cost of Goods Sold - Selling, General,
& Admin. Expense (SGA) - Research & Development - Depreciation,
Depletion & Amortization Operating Income or EBIT is linked to
Return on Capital for both regular definition and Joel
Greenblatts definition. Return on Capital (ROC) = (EBIT -
Adjusted Taxes) / (Book Value of Debt + Book Value of Equity -
Cash) Joel Greenblatts definition of Return on Capital: Return
on Capital = EBIT / (Net fixed Assets + Working Capital) It is
also linked to Joel Greenblatts definition of Earnings Yield:
Earnings Yield = Earnings before Interest & Taxes / Enterprise
Value. EBIT is also linked to Operating Margin: Operating Margin
= Operating Income (EBIT) / Total Revenue. Compared with a
companys EBITDA margin, Operating Margin can be manipulated by
adjusting the rate of depreciation, depletion and amortization
(DDA). If a company is facing competition, its Operating Margin
may decline. Often the Operating Margin declines well before the
companys revenue or even p