Ebitda is an essential fundamental indicator for those who invest in the Stock Exchange. If you are taking your first steps into variable income, understanding this concept and its application is the beginning of a long journey. In addition to discovering the evolution of the company's cash generation over the years, Ebitda analysis also allows comparisons between companies in different sectors – and even countries. But how reliable is Ebitda? Can it be analyzed in isolation? In this article, you will discover how to calculate Ebitda with practical examples, you will understand the difference between Ebit and Ebitda and also discover why this analysis is important before making the decision to invest in a company . If you have any questions at the end, just leave a comment. Good reading! Click and download the stock exchange guide for free What is Ebitda.
An illustration of a magnifying glass with a dollar sign in the center on a graph, in reference to Ebitda Ebitda is the acronym for the English expression Earnings Brother cell phone list before Interest, Taxes, Depreciation and Amortization. In Portuguese, Ebitda means Earnings before Interest, Taxes, Depreciation and Amortization. From this translation, an acronym emerged that can be considered the Portuguese version of Ebitda. We are talking about EBITDA, an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. But be careful: do not confuse Ebit with Ebitda, nor EBITDA with EBITDA. Below, we will dissect the two indicators. The Ebitda calculation allows the analyst, investor or manager to know how much cash the company is generating considering only its operational activities – its core activity.
Therefore, Ebitda excludes financial impacts and taxes from the cash generation calculation. In doing so, the indicator provides shareholders with the company's real performance, because it analyzes what is within the reach of employees and executives, without looking at complex issues, such as interest and taxes. But how can Ebitda be used in company analysis ? That's what we're going to find out next. What is the role of EBITDA? Ebitda is a very useful indicator for measuring a company's cash generation potential, in order to discover how productive and efficient it becomes over the years. This analysis is essential for those who invest in companies with a partner mentality, prioritizing companies capable of generating value on an ongoing basis. This is because Ebitda only considers what the company generates in value with its core activity, without taking into account expenses with interest and loans, for example.