Accounting
EBITDA is a measure of what a company earns from its core business activities before paying interest on its debts, taxes, and depreciation (the loss in book value of its equipment). Its name stands for earnings before interest, taxes, depreciation, and amortization. In English, it's called EBITDA.
Let's take two garages that make the same revenue from repairs: one has significant debt, the other doesn't. Their net profit will be very different, while their EBITDA will be similar, because it excludes the impact of debt and tax choices. This is why buyers and bankers look at it: it shows the true strength of operations. A company is often sold at a multiple of its EBITDA (for example, 4 times EBITDA). Note: it says nothing about the actual cash on hand or the investments to be made. Bankeo will connect you with a verified accountant/CPA free of charge to calculate and interpret it correctly, and we'll be there to support you.
This is the money generated by a company's core business, before deducting three things that vary greatly from one company to another: loan interest, taxes, and depreciation (the accounting wear and tear of equipment). This allows for comparison between two companies on the same basis.
Yes. BAIIA is the French term (bénéfice avant intérêt, impôts et amortissements) and EBITDA is its English equivalent. Both measure exactly the same thing: the profitability of operations.
No. EBITDA doesn't account for interest, taxes, depreciation, and reinvestment costs: your actual net profit is lower. It's a performance indicator, not your account balance. Bankeo will connect you with a verified accountant/CPA free of charge to provide context, and we'll be there to support you every step of the way.
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