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Category Archives: Business

The what and why Of EBIT and EBITDA

One of the common questions we get asked is why does the term EBIT or EBITDA get used so frequently in valuation work?

EBIT stands for Earnings Before Interest and Taxes (EBITDA is Earnings Before Interest, Taxes, Depreciation and Amortisation).

EBIT is sales less expenses (including depreciation) adding back any interest paid and subtracting any interest received.  The only change to EBITDA is that depreciation and amortisation are added back.

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