Question

Discuss the value of EBITDA (earnings before interest, taxes, depreciation and amortization) in financial analysis.

Discuss the value of EBITDA (earnings before interest, taxes, depreciation and amortization) in financial analysis.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

EBITDA:

An indicator of a company's financial performance which is calculated in the following EBITDA calculation:
EBITDA= revenues - expenses (excluding tax, interest, depreciation and amortization)
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume a corporation has earnings before amortization and taxes (EBAT) of $106,000 and amortization of $44,000,...
Assume a corporation has earnings before amortization and taxes (EBAT) of $106,000 and amortization of $44,000, and it has a 40 percent tax rate. Compute its cash flow. (Input all answers as positive values.)               Earnings before amortization and taxes $      Amortization         Earnings before taxes $      Taxes @ 40%      Earnings after taxes $      Amortization         Cash flow $   
Why are taxes deducted from the sum of EBIT (earnings before interest and taxes) and depreciation...
Why are taxes deducted from the sum of EBIT (earnings before interest and taxes) and depreciation when calculating operating cash flow? A. Because taxes are cash inflow. B. Because taxes should not be paid. C. Because higher taxes lead to higher operating cash flow. D. Because taxes are paid in cash to the Internal Revenue Service.
Assume a corporation has earnings before depreciation and taxes of $150,000, depreciation of $55,000, and a...
Assume a corporation has earnings before depreciation and taxes of $150,000, depreciation of $55,000, and a 40% tax bracket. a. compute its cash flow using this format: Earnings before Dep & Taxes Depreciation Earnings before Taxes Taxes Earnings after Taxes Depreciation b. Compute cash flow if depreciation is only $30,000 c. How much cash flow is lost due to the reduction of depreciation?
Assume a corporation has earnings before depreciation and taxes of $126,000, depreciation of $42,000, and that...
Assume a corporation has earnings before depreciation and taxes of $126,000, depreciation of $42,000, and that it has a 35 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.)    Earnings before depreciation and taxes    Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow b. How much would cash flow be if there were only $16,000 in depreciation? All other factors are the same. Cash flow    c....
Assume a corporation has earnings before amortization and taxes (EBAT) of $100,000 and amortization of $10,000,...
Assume a corporation has earnings before amortization and taxes (EBAT) of $100,000 and amortization of $10,000, and it has a 34 percent tax rate. a. Compute its cash flow. Cash flow $ b. Compute the difference in cash flow, If there was $50,000 in amortization. Difference in cash flow $
Assume a corporation has earnings before amortization and taxes (EBAT) of $100,000 and amortization of $10,000,...
Assume a corporation has earnings before amortization and taxes (EBAT) of $100,000 and amortization of $10,000, and it has a 34 percent tax rate. a. Compute its cash flow. Cash flow $ b. Compute the difference in cash flow, If there was $50,000 in amortization. Difference in cash flow $
Multinational Co. (MNC) generated $1,500 million in domestic earnings before interest, taxes, and amortization (EBITA). MNC...
Multinational Co. (MNC) generated $1,500 million in domestic earnings before interest, taxes, and amortization (EBITA). MNC amortizes intangible assets at $275 million per year and takes a $160 million interest expense. MNC's statutory (domestic) tax rate is 21.5 percent on earnings before taxes, but only 15 percent on foreign operations. MNC has $150 million of pre-tax foreign income and generates $35 million in ongoing research and development (R&D) tax credits. What is its effective tax rate on pre-tax profits? a)...
Assume a corporation has earnings before depreciation and taxes of $125,000, depreciation of $40,000, and that...
Assume a corporation has earnings before depreciation and taxes of $125,000, depreciation of $40,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.) 25,487 answers PArticulars Amount($) earnings before depreciation and taxes Less:depreciation Earnings before tax Less:tax@30% Net income b. How much would cash flow be if there were only $15,000 in depreciation? All other factors are the same. c. How much cash flow is...
Assume a firm has earnings before depreciation and taxes of $550,000 and no depreciation. It is...
Assume a firm has earnings before depreciation and taxes of $550,000 and no depreciation. It is in a 40 percent tax bracket. a. Compute its cash flow.    b. Assume it has $550,000 in depreciation. Recompute its cash flow.    c. How large a cash flow benefit did the depreciation provide?   
Widget Inc. expects earnings before interest and taxes (EBIT) next year of $2 million. It depreciation...
Widget Inc. expects earnings before interest and taxes (EBIT) next year of $2 million. It depreciation and capital expenditures will both be $500,000, and it expects both to stay equal for the next few years. Their working capital will increase by $100,000 over the next year. Its tax rate is 35%. If its WACC is 10% and its FCFs are expected to increase at 4% per year in perpetuity, what is its enterprise value?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT