What is EBITDA
- what is the full form of EBITDA
- what is its importance.
EBITDA
how the actual economic condition of the company is revealed and how it can help in investing in the company's stock and making decisions.
How EBITDA makes the financial information of the company more clear. Or it is not that the actual income of the company is exaggerated by reporting it. All this and other information on this subject will be understood here
EBITDA full form is Earnings before interest, taxes, depreciation and amortisation.
So Ebitda means interest, tax, depreciation and income before giving loans. Ebitda is also a way to know the financial situation of the company which is used instead of net income.
How to Count
It is withdrawn by adding the interest paid by the company to the net income, tax, depreciation imposed on properties and the amount of loan repaid.
Companies may argue that EBITDA is a better way to know the real income of the company. It can be used to compare companies in the same industry or in different industries. the formula for removing EBITDA is:
Ebitda = Net Income + Interest +Tax + Depreciation + Loan Repaid
reality
Companies can argue that we have to pay more interest because of excessive debt and also repay that loan, so when we are compared to other companies which have less debt than us, that comparison should be done on the basis of our EBITDA. But the fact is that if you have taken a loan, you will also have to bear the additional cost of interest.
useful
Sometimes the rate of tax on different companies may vary. The capital structure of the two companies may also be different. Compared to EBITDA, it will make it easier for the investor to find out how fast the company is growing compared to the sale of products or services. In fact, it reduces the impact of capital expenditure incurred by the company.
Make your own decisions
Whether it is right to compare EBITDA depends on the difference in size of two companies, the difference in their capital structure and the comparatively need for capital investment in the industry in which the company is in.
So, whether you should compare EBITDA or not, you need to understand the meaning of this and also understand how important it is given the capital structure of the company you are choosing as an investment.
In what happens to EBITDA, we today chose a slightly technically difficult subject, but still hope that we have succeeded in understanding the importance and use of EBITDA in easy language.
Hi , This is Pramod Choudhary from Nagaur Rajasthan India. I an student and I would like to share my positive thinking with everyone that's my passion . Thank you
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