Earnings before interest, taxes, depreciation and amortization

EBITDA is an economic indicator that makes an indication of the profitability of a company.

EBITDA is the acronym for English: earnings before interest, taxes, depreciation and amortization. That means " earnings before interest, taxes, depreciation and amortization ( on fixed assets ), depreciation and amortization ( of intangible assets ) ". It is thus a description of the operational capacity before capital expenditure (operating profit).

In practice, it should be noted that companies need to make conservation investment in plant and machinery frequently to maintain the business, which are not shown by definition in EBITDA. A positive EBITDA thus says little about the long -term performance and stability of a company.

Furthermore, partly from a "adjusted " ( adjusted ) EBITDA is spoken, which is corrected by the so-called ' extraordinary costs '. The intention of this measure is to show how the actual business operations, excluding special items stands. Since it is entirely at the discretion of the company, which items are referred to as " extraordinary " - as the costs of litigation, marketing promotions, severance payments, restructuring - is one such "adjusted EBITDA" but in itself of further lesser significance than the EBITDA.

The English term amortization ( amortization of intangible assets ) is not " payback " to be equated with the German term that refers in business administration only on goodwill amortization, but not depreciation, for example, of licenses, patents and software.

Calculation

Income after taxes (EAT, Net Income ) EBITDA is calculated as follows:

Application

In Germany, the EBITDA associated with the corporate tax reform of 2008 input into the tax law. Known as the interest barrier rules limiting the deductibility of net interest costs to an amount which may not exceed 30 % " of earnings before interest, taxes, depreciation and amortization of tangible assets and amortization of intangible assets ( EBITDA) ".

At the time of the Neuer Markt, the adjusted EBITDA of some unprofitable company was used to disguise a loss situation, because it still delivers clean up the income of many expense items may positive values. Was supported such reporting by the ability to post sales before the actual delivery of goods and accounting. EBITDA can also be artificially increased by capitalization of internal performance. In extreme cases, a company may report a positive EBITDA to have earned without an actual inflow of cash.

The EBITDA figure is still relevant; a statement about the performance of a company can ultimately only be achieved through analysis of several indicators.

The profit variable is not regulated by the accounting standard GAAP.

EBITDA margin

The EBITDA margin (English: EBITDA margin ) is the ratio of EBITDA to revenue (EBITDA divided by sales). Whether the EBITDA margin is a meaningful statement is controversial and depends very much on the type of business from.

Trivia

After the accounting fraud at the company ENRON in 2001 EBITDA was in the sarcastic sense reinterpreted as Earnings before I tricked the dumb auditor (profit before I deceived the stupid accountants ).

Swell

• Operating performance measure
• Abbreviation