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meaning:
Earnings before interest,taxes,depreciation and amortization.
It is an indicator of an company’s financial performance.
<span style=”line-height: 1.5;”>statement formation:
</span>The auditor was able to evaluate the firm’s profitability using EBITDA,but not its cash flow.
EBITDA gained popularity in the 1980s at the height of the leverage buyout era.
EBITDA=REVENUE- EXPENSES
EBITDA is a popular valuation multiple used in the finance industry to measure the value of a company.
eg : is one that provides average EV/EBITDA multiple on a wide sample of transactions on private companies in the EUROZONE.
EBITDA is calculated using the company’s income statement. It is not included as a line item, but can be easily derived by using the other line items that must be reported on an income statement.
EBITDA is essentially net income with interest, taxes, depreciation and amortization added back to it.
It is used to analyse a compare profitability between companies and industries because it eliminates the effects of financial and accounting decisions.
EBITDA= REVENUE- EXPENSE (excluding tax, interest, depreciation and amortization)
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