5 - Historical Operating Assumptions

Startwithebitandjustaddbackdepreciation

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Unformatted text preview: for EBITDA EBITDA = Cash Gross Profit – Cash SGAE Earnings before interest, taxes, depreciation, and amortization Three ways to get EBITDA Three ways to get EBITDA Take Net Income (Earnings) and add back Interest, Tax, Depreciation and Amortization expenses. Start with EBIT and just add back Depreciation and Amortization. Start with Revenue and subtract only the Cash COGS (excluding Depreciation) and Cash SG&A (excluding Amortization) EBITDA is also often called EBITDA is also often called Operating Cash Flow EBITDA is both a cash flow measure and an Operating measure Since it excludes non­cash items and it is calculated before subtracting interest expense. EBITDA is before interest expense, so it is independent of capital structure So, you can assess the impact of a Transaction on a company without having to change EBITDA EBIT ­ Earnings Before Interest and EBIT ­ Earnings Before Interest and Taxes. Sales minus the expenses that are directly related to the operations of the business, but before subtracting Interest expense and Income Taxes. EBIT Margin is simply EBIT divided by Revenue. EBI...
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