earnings before interest, taxes, depreciation, and amortization


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Earnings before interest, taxes, depreciation, and amortization (EBITDA)

A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation and amortization expenses are not included in the costs.

Earnings Before Interest, Taxes, Depreciation and Amortization

A measure of a company's ability to produce income on its operations in a given year. It is calculated as the company's revenue less most of its expenses (such as overhead) but not subtracting its tax liability, interest paid on debt, amortization or depreciation. It is important to note that EBITDA does not account for one-off or otherwise unusual revenues and expenses, only recurring ones. It is a less common measure than EBITD or EBIT.

earnings before interest, taxes, depreciation, and amortization (EBITDA)

One popular measure of cash generated from the operation of a company. Financial analysts frequently use EBITDA to evaluate the ability of a company to service its debt obligations. EBITDA is also used as a measure of profitability in valuing a company and in comparing a company's financial performance with other firms. Critics contend EBITDA can be a misleading financial tool, in part because companies have wide discretion in determining the dollar amount of the components used in calculating EBITDA. In addition, EBITDA does not consider the funds a company is likely to require for capital investments. See also cash flow, free cash flow.
Case Study Belgian brewer Interbrew NV announced in summer 2001 a deal to purchase Germany's fourth largest brewer, Brauerei Beck & Co. Interbrew was interested in an expanded presence in Germany and Italy, and also in the U.S. market, where Beck's was a major import brand. At the time of the announcement Interbrew's flagship brand, Stella Artois, was a minor player in the U.S. market. Some analysts criticized Interbrew for paying too high a price based on Beck's earnings before interest, taxes, depreciation, and amortization (EBITDA). The DM 3.5 billion ($1.58 billion) price represented 13 times Beck's EBITDA in the most recent fiscal year, substantially more than the 11.3 times EBITDA paid by another firm for the major French brewer Kronenbourg in an earlier deal.

earnings before interest, taxes, depreciation, and amortization (EBITDA)

(pronounced “ee-bit-dah”) Net earnings of a business before deductions for interest, taxes, or depreciation.It often provides the standard for purchase of income-producing properties or going-concern businesses, with buyers and sellers conducting negotiations in terms of multiples of EBITDA, such as an offer to buy at “seven times EBITDA.”

References in periodicals archive ?
Pro forma consolidated total debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to be about 4.
Fiscal 1997 pro forma coverage of interest from earnings before interest, taxes, depreciation, and amortization is 5 times, and pro forma cash balances should exceed $200 million.

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