What Is Stock-Based Compensation?
Stock-Based Compensation is a cost that appears on the Income Statement alongside Depreciation & Amortization of PP&E and Amortization of Intangibles. It is the financial value of any stock given to employees as part of their compensation package and is tax deductible.
Stock-Based Compensation must be added to Operating Expenses (along with Depreciation and Amortization) in order to determine Operating Income.
To calculate EBIT, the most basic formula is Operating Income + Stock-Based Compensation, and it must also be added back on for.
- Earnings Before Interest & Tax (EBIT)
- Earnings Before Interest, Taxation, Depreciation & Amortization (EBITDA)
- Income Statement (IS)
- Operating Expenses
- Operating Income
- Plant, Property & Equipment (PP&E)