- Earnings Before Interest, Taxes, Depreciation and Amortization - EBITDA
- An indicator of a company's financial performance which is calculated in the following EBITDA calculation:
EBITDA is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions.
This is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.
EBITDA first came into common use with leveraged buyouts in the 1980s, when it was used to indicate the ability of a company to service debt. As time passed, it became popular in industries with expensive assets that had to be written down over long periods of time. EBITDA is now commonly quoted by many companies, especially in the tech sector - even when it isn't warranted.
A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability, but not cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings. When using this metric, it's key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Earnings Before Interest, Taxes, Depreciation, Amortization And Special Losses - EBITDAL — A measure of a company s financial performance that looks at earnings before the inclusion of interest, taxes, depreciation, amortization and losses. These losses can be related to non recurring expenses such as a loss in derivatives used to… … Investment dictionary
EBITA — earnings before interest, taxes, Depreciation, and amortization доходы до уплаты процентов, налогов, списаний и начислений амортизации … Финансово-инвестиционный толковый словарь
Dictionnaire d'économie — Projet:Économie/Liste des articles Cet article est une liste référençant l économie. D autres articles peuvent être identifiés dans la catégorie correspondante Le but de cette page est de lister les articles de Wikipédia relatifs à l économie.… … Wikipédia en Français
History of Real Madrid C.F. — This articles details the History of Real Madrid football club. Early years , due to the stagnation of the ongoing civil war, all activity disappeared and the club virtually ceased to exist.antiago Bernabéu YesteBefore becoming President in 1945 … Wikipedia
Meridian Knowledge Solutions — Meridian Knowledge Solutions, LLC Type Private Industry Software Headquarters Herndon, Va., United States U.S. Key people Roy Haythorn (Executive Vice President of Operation … Wikipedia
ебитдар — Earnings Before Interest, Taxes, Depreciation, Amortization and Rent – ебитда (см. ебитда) но с учетом затрат на аренду … Словарь бизнес-сленга
EBITDAR — Earnings Before Interest Taxes Depreciation Amortization And Rent (Business » Accounting) … Abbreviations dictionary
Caldor — Infobox Defunct company company name = Caldor company fate = Bankruptcy successor = foundation = 1951 (Port Chester, New York) defunct = May 15, 1999 location = Norwalk, Connecticut industry = Retail key people = products = Clothing, photography … Wikipedia
EBIDTA — Earnings Before Interest, Depreciation, Taxes, and Amortization (Business » General) … Abbreviations dictionary
Income statement — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts … Wikipedia
cash flow — the flow of internal funds generated within the business as a result of receipts from debtors, payments to creditors, drawings and cash sales. Glossary of Business Terms The cash receipts and payments of a business. This differs from net income… … Financial and business terms