Finance

Hello Igor,

Hope you enjoyed your Microsoft Finance for Non-Financial Managers course with Best STL.

Thank you for your question regarding EBITDA.

EBITDA is earnings (i.e. profit) before interest, tax, depreciation and amortisation.

EBITDA is the company’s operating profit excluding non-cash accounting charges reflecting the write-off of tangible (depreciation) and intangible (amortisation) assets.

It is used as an approximation to cashflow generated, although it does not take into account the impact on cashflow of increases or reductions in net working capital.

Where net working capital is relatively stable EBITDA is a very good indication of cash generated by the business and which can be used to pay:

the banks, in the form of interest,
the taxman and
the shareholders, in the form of dividends

I hope this resolves your question. If it has, please mark this question as resolved.

If you require further assistance, please reply to this post. Or perhaps you have another Microsoft Office question?

Have a great day.
Regards,

Rodney
Microsoft Office Specialist Trainer