FULL FORM OF EBITA
WHAT IS EBITA
EBITA stand for Earning before interest,taxes and amortization. It is a measuring tool of a company's profitability used by investors. It is important measuring tool for comparison of one company to another in the same business. EBITA provides a accurate view of the company's actual performance over a period of time.
A company's EBITA is considered by investors and analyst to be more precise representation of its real earning. EBITA helps to assess that how much cash flow a company has to to reinvest in the business or to pay dividends. It also indicates the capability of company's operation.
HOW EBITA IS CALCULATED
The EBITA is calculated by subtracting the cost of goods sold and operating expenses less amortization expenses from gross revenue.
EBITA = Total Revenue -Cost of goods sold -(Operating Expenses + Amortization )
EBITA is also calculated by indirect method by adding the interest expenses, taxes,and amortization back to net income such as --
EBITA= Net income+ Interest+Taxes+ Amortization.
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