5 - Historical Operating Assumptions

Startwithebitandjustaddbackdepreciation

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern