What is the firm’s EBITDA?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter2: Financial Statements, Cash Flow, And Taxes
Section2.3: The Income Statement
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  1. The firm’s NOPAT= $115, depreciation expense is $12.5, amortization expense is $0, and interest expense is $15 and tax rate = 30%.  What is the firm’s EBITDA?

 

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EBITDA (Earnings before interest, tax, depreciation & amortization):

It is one of the metrics used widely to know about a company's profitability. Hence, it becomes a good measure to compare various companies and the industry with the firm.

It helps in eliminating irrelevant factors and therefore provides a better comparison between various companies.

 

 

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