EBITDA Definition

EBIDA :

Definition

Earnings Before Interest, Depreciation And Amortization. By adding back interest and amortization payments as well as depreciation (a non-cash outflow expense), it allows the measurement of the cash that a company generates. It is more conservative than its more popular counterpart, EBITDA, which adds back tax payments as well.

EBITDA:

Definition

Earnings Before Interest, Taxes, Depreciation and Amortization. An approximate measure of a company's operating cash flow based on data from the company's income statement. Calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization. This earnings measure is of particular interest in cases where companies have large amounts of fixed assets which are subject to heavy depreciation charges (such as manufacturing companies) or in the case where a company has a large amount of acquired intangible assets on its books and is thus subject to large amortization charges (such as a company that has purchased a brand or a company that has recently made a large acquisition). Since the distortionary accounting and financing effects on company earnings do not factor into EBIDTA, it is a good way of comparing companies within and across industries. This measure is also of interest to a company's creditors, since EBIDTA is essentially the income that a company has free for interest payments. In general, EBIDTA is a useful measure only for large companies with significant assets, and/or for companies with a significant amount of debt financing. It is rarely a useful measure for evaluating a small company with no significant loans. Sometimes  also called EBITDA or operational cash flow.

EBIT:

Definition

Earnings Before Interest and Taxes. A measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes. EBIT excludes income and expenditure from unusual, non-recurring or discontinued activities. In the case of a company with minimal depreciation and amortization activities, EBIT is watched closely by creditors, since it represents the amount of cash that such a company will be able to use to pay off creditors, also  called operating profit.

EBIT MARGIN:

Definition

A profitability measure equal to EBIT divided by net revenue. This value is useful when comparing multiple companies, especially within a given industry, and also helps evaluate how a company has grown over time.

EBITDA CAPEX:

Definition

This is a more practical assessment of earnings that with just EBITDA. It stands for EBITDA minus capital expenditures.