Financial modelling terms explained

Earnings Before Interest, Taxes, Depreciation, And Amortization

Earnings before interest, taxes, depreciation, and amortization, or EBITDA, is a measure of a company's operating profitability, calculated by subtracting a company's total operating expenses from its total revenue. Investing Thesis: EBITDA is a good way to evaluate a company's financial performance, but it's not a good way to value a business

What Does EBITDA Stand For?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's financial performance that takes into account the company's operating income (earnings before interest and taxes), depreciation, and amortization expenses. EBITDA is used as a proxy for cash flow because it excludes the impact of non-cash expenses on a company's income statement.

What Does EBITDA Represent?

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of a company's profitability that takes into account the company's operating income, before the impact of interest payments, tax expenses, depreciation, and amortization. This metric is used by investors and analysts to assess a company's financial health and performance.

How Do You Calculate EBITDA?

There are a few different ways to calculate EBITDA, but the most common is to simply subtract total operating expenses from total revenue. This will give you the company's net income, which you can then add back in any interest payments, taxes, and depreciation expenses. This will give you the company's EBITDA.

What Is EBITDA Used For?

EBITDA is used as a measure of a company's profitability. It is calculated by subtracting the company's operating expenses from its operating income. This measure is used to determine a company's ability to generate cash flow and to repay its debt.

What's the Difference Between EBITDA and Net Income?

EBITDA is a measure of a company's operating performance. It is calculated by adding back depreciation and amortization to net income. This provides a measure of the company's cash flow from its operations. Net income is the company's profit or loss for the period. It is calculated by subtracting expenses from revenue.

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