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EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. EBITDA is calculated from a Company’s Profit & Loss, focusing on the Cash Earnings before Interest Expense and Taxes.

EBITDA measures a Company’s Operating Cash Flow before deducting the non-cash items of Depreciation and Amortisation, calculated by the formula.

EBITDA = Sales – Op Expenses + Depreciation + Amortisation

Non- Cash items of Depreciation and Amortisation are added back. Thus, the EBITDA figure is focusing on the Operating Cash Flow. Like the EBIT figure, lower in the Profit and Loss, the EBITDA figure excludes the impact of leverage, interest rates and taxes. The EBITDA figure is a useful guide for inter-sectoral valuations using Ratios such as, EBITDA / Sales, a margin expressed as a percent or EV / EBITDA, a multiple.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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