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Financial Terms | |
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) |
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Definition of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting interest, tax, depreciation and amortization.
Related Terms:Abusive Earnings ManagementThe use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result. Abusive Earnings ManagementA characterization used by the Securities and Exchange Accelerated depreciationAny depreciation method that produces larger deductions for depreciation in the accelerated depreciation(1) The estimated useful life of the fixed asset being depreciated is Accelerated depreciationAny of several methods that recognize an increased amount Accounting earningsearnings of a firm as reported on its income statement. ![]() Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the Accrued InterestThe amount of interest accumulated on a debt security between Accrued InterestThe amount of interest owing but not paid. Accumulated depreciationA contra-fixed asset account representing the portion of the cost of a fixed asset that has been previously charged to expense. Each fixed asset account will have its own associated accumulated depreciation account. accumulated depreciationA contra, or offset, account that is coupled Accumulated depreciationThe sum total of all deprecation expense recognized to date Adjusted EarningsNet income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss. Adjusted EBITDAConventional earnings before interest, taxes, depreciation, and amortization (ebitda) revised to exclude the effects of mainly nonrecurring items of revenue or gain and expense or loss. AmortizationThe repayment of a loan by installments. ![]() AmortizationSee depreciation, but usually in relation to assets attached to leased property. amortizationThis term has two quite different meanings. First, it may AmortizationReduction in value of an asset over some period for accounting AmortizationThe write-off of an asset over the period when the asset is used. This term AmortizationThe systematic and rational allocation of capitalized costs over their useful lives. AmortizationThe reduction of debt by regular payments of interest and principal sufficient to pay off a loan by maturity. amortizationThe repayment of a loan by installments. Amortization (Credit Insurance)Refers to the reduction of debt by regular payments of interest and principal in order to pay off a loan by maturity. Amortization factorThe pool factor implied by the scheduled amortization assuming no prepayemts. Amortization ScheduleA schedule that shows precisely how a loan will be repaid. The schedule gives the required payment on each specific date and shows how much of it constitutes interest and how much constitutes repayments of principal. Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as interest rates Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Average Amortization PeriodThe average useful life of a company's collective amortizable asset base. Base interest rateRelated: Benchmark interest rate. basic earnings per share (EPS)This important ratio equals the net Basic Earnings Power RatioPercentage of earnings relative to total assets; indication of how Before-tax profit marginThe ratio of net income before taxes to net sales. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then Capitalized Interestinterest incurred during the construction period on monies invested in Cash flow after interest and taxesNet income plus depreciation. Compound interestinterest paid on previously earned interest as well as on the principal. Compound Interestinterest paid on principal and on interest earned in previous compound interesta method of determining interest in which interest that was earned in prior periods is added to the original investment so that, in each successive period, interest is earned on both principal and interest compound interestinterest earned on interest. Compound Interestinterest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest. Core EarningsA measure of earnings that includes only the results of the primary operating Cost Plus Estimated Earnings in Excess of BillingsRevenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Daily Interest AccumulationAccount in which interest is accrued daily and credited to the account at the end of a specified time. Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Defined EBITDAA measure of ebitda that is outlined or defined in a debt or credit agreement. DepreciationA non-cash expense that provides a source of free cash flow. Amount allocated during the DepreciationA technique by which a company recovers the high cost of its plant-and-equipment assets gradually during the number of years they’ll be used in the business. depreciation can be physical, technological, or both. DepreciationAn expense that spreads the cost of an asset over its useful life. depreciationRefers to the generally accepted accounting principle of allocating DepreciationReduction in value of fixed or tangible assets over some period DepreciationBoth the decline in value of an asset over time, as well as the gradual Depreciationa) Of capital stock: decline in the value of capital due to its wearing out or becoming obsolete. DepreciationThe systematic and rational allocation of the cost of property, plant, and equipment Depreciationamortization of fixed assets, such as plant and equipment, so as to allocate the cost over their depreciable life. Depreciation AllowancesTax deductions that businesses can claim when they spend money on investment goods. Depreciation expenseAn expense account that represents the portion of the cost of an asset that is being charged to expense during the current period. Depreciation tax shieldThe value of the tax write-off on depreciation of plant and equipment. depreciation tax shieldReduction in taxes attributable to the depreciation allowance. diluted earnings per share (EPS)This measure of earnings per share Double-declining-balance depreciationMethod of accelerated depreciation. EarningsNet income for the company during the period. EarningsIn general, refers to a company's total sales less cost of sales and operating expenses, including interest and income tax. earnings before interest and income tax (EBIT)A measure of profit that Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting interest and tax. Earnings ManagementThe active manipulation of earnings toward a predetermined target. Earnings per ShareA measure of the earnings generated by a company on a per Earnings per share (EPS)EPS, as it is called, is a company's profit divided by its number of outstanding earnings per share (EPS)See basic earnings per share and diluted earnings per share. Earnings per share of common stockHow much profit a company made on each share of common stock this year. Earnings retention ratioPlowback rate. Earnings surprisesPositive or negative differences from the consensus forecast of earnings by institutions Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest EBBS - Earnings before the bad stuffAn acronym attributed to a member of the Securities and EBDDT - Earnings before depreciation and deferred taxesThis measure is used principally by EBITDAearnings before interest, taxes, depreciation, and amortization. EBITDA Marginebitda divided by total sales or total revenue. EBITDARearnings before interest, taxes, deprecation, amortization, and rents. Economic earningsThe real flow of cash that a firm could pay out forever in the absence of any change in Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of effective annual interest rateinterest rate that is annualized using compound interest. Effective Interest RateThe rate of interest actually earned on an investment. It is Equilibrium rate of interestThe interest rate that clears the market. Also called the market-clearing interest Extended Amortization PeriodAn amortization period that continues beyond a long-lived asset's economic useful life. Extended Amortization PeriodsAmortizing capitalized expenditures over estimated useful lives that are unduly optimistic. Fixed Interest RateA rate that does not fluctuate with general market conditions. Floating Interest RateA rate that fluctuates with general market condition. Forward interest rateinterest rate fixed today on a loan to be made at some future date. fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. Fully diluted earnings per sharesearnings per share expressed as if all outstanding convertible securities Gross interestinterest earned before taxes are deducted. Guaranteed Interest Annuity (GIA)interest bearing investment with fixed rate and term. Guaranteed Interest Certificate (GIC)interest bearing investment with fixed rate and term. Indirect Taxestaxes paid by consumers when they buy goods and services. A sales tax is an example. Insurable InterestIn England in the 1700's it was popular to bet on the date of death of certain prominent public figures. Anyone could buy life insurance on another's life, even without their consent. Unfortunately, some died before it was their time, dispatched prematurely in order that the life insurance proceeds could be collected. In 1774, English Parliament passed a law which restricted the right to be a beneficiary on a life insurance contract to those who would suffer an economic loss when the life insured died. The law also provided that a person has an unlimited insurable interest in his own life. It is still a legal stipulation that an insurance contract is not valid unless insurable interest exists at the time the policy is issued. Life Insurance companies will not, however, issue unlimited amounts of coverage to an individual. The amount of life insurance which will be approved has to approximate the loss caused by the death of the individual and must not result in a windfall for the beneficiary. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |