FULL FORM OF EBIDTA
WHAT IS EBITDA
EBITDA stand for Earning before interest,tax,depreciation and amortization. It measures the company's operating performance. Essentially it's way to evaluate a company's performance without having to factor in financial decision,tax environments and accounting decisions.
EBITDA is calculated by the following formula ---
EBITDA= EBIT+ Depreciation+ Amortization
EBITDA is a operating measure commonly used by financial analysts. It allows analysts to concentrate on the outcome of operating decisions while excluding the impacts of non- operating decisions such as interest expenses,tax rates or large non cash items such as depreciation and amortization.
By minimising the non-operating effects which are not similar to each company,EBITDA allows investors to focus on operating profitability as a singular measure of performance. This type of analysis is important when comparing the profitability of similar companies across a single industry or companies operating in different tax brackets.
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