EBITDA / Earnings before interest payments, taxes, depreciation and amortization

EBITDA is one of the most important indicators of company valuations. It provides an account of the company's actual profit-generating capacity, regardless of where and how it is taxed, what investments it writes off amortisation for, and what loans it repays.

EBITDA = Taxed profit + interest balance (interest payment-interest income) + taxes paid + depreciation.

EBITDA stands for "earnings before interest, taxes, depreciation and amortization". Our business interest payment, taxation and depreciation shows the result before description. 

Although investors are one acquisition before, a wide variety of performance indicators are used, among which EBITDA is of particular importance, because it eliminates some of the differences between companies and thus makes the actual business processes comparable. However, EBITDA alone is not suitable for determining the value of a company, since it is essentially one after all company results data. At the same time, it is an excellent indicator number to show how the company's own sector performs compared to other businesses. 

For example, the difference between the results of two otherwise identical businesses can be significant due to the fact that they are not taxed in the same country or are subject to different taxation within a country. It can also make a big difference if one pays off more serious loans than the other. But the results can differ significantly even if one of the companies previously made large investments, as a result of which it has now recorded a large amount of depreciation. 

The investor must also appreciate these differences, obviously he is not happy with high indebtedness, but it may be good for him if the company under investigation has developed a lot in the past. The liabilities to pay taxes is also important to him, since if it is too high, he can consider, for example, relocating the company to a country with lower taxes. 

By filtering out these factors, we get the result of the actual business activity of our company. This clearly shows the productivity, a competitiveness, which is excellent for assessing and comparing the company's fundamentals. This is the reason why from EBITDA as well return and company value used to define.

It is the little brother of EBITDA EBIT, which does not remove depreciation from the formula.