EBITDA

(noun)

Earnings before interest, taxes, depreciation and amortization.

Related Terms

  • times interest earned ratio
  • EBIT
  • Interest

Examples of EBITDA in the following topics:

  • Times-Interest-Earned Ratio

    • It may be calculated as either EBIT or EBITDA, divided by the total interest payable.
    • EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization.
    • The EBITDA of a company provides insight on the operational profitability of the business.
    • If EBITDA is negative, then the business has serious issues.
    • A positive EBITDA, however, does not automatically imply that the business generates cash.
  • Times Interest Earned Ratio

    • Times Interest Earned Ratio = (EBIT or EBITDA) / (Required Interest Payments), and is indicative of a company's financial strength.
    • Analysts will sometimes use EBITDA instead of EBIT when calculating the Times Interest Earned Ratio.
    • EBITDA can be calculated by adding back Depreciation and Amortization expenses to EBIT.
  • Understanding Future Stock Value

    • EBITDA stands for earnings before interest, taxes, depreciation and amortization.
    • To compute, divide the EV by EBITDA (see above for calculations).
  • Debt Utilization Ratios

    • It may be calculated as either EBIT or EBITDA, divided by the total interest payable.
    • EBIT is earnings before interest and taxes, and EBITDA is earnings before interest, taxes, depreciation, and amortization.
  • Net Income

    • Net sales (revenue) – Cost of goods sold = Gross profit – SG&A expenses (combined costs of operating the company) = EBITDA – Depreciation & amortization = EBIT – Interest expense (cost of borrowing money) = EBT – Tax expense = Net income (EAT)
  • The Forecast Budget

    • The adjusted net income method starts by calculating operating income (EBIT or EBITDA) and adding/subtracting short-term changes in the balance sheet, such as those that occur to inventories, payable, receivables and other short-term.
  • Income Statement Analyses

    • It may be calculated as either EBIT or EBITDA divided by the total interest payable.
  • Profit and Value

    • Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) equals sales revenue minus cost of goods sold and all expenses, except for interest, amortization, depreciation and taxes.
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