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Andre Maurois

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EBITA

 

EBITA (earnings before interest, taxes and amortization) is a financial indicator that shows company’s earnings which are equal to pretax profit plus corporate tax and amortization. 

 

EBITA is not very often used in practice as this ratio is something in between on EBIT and EBITDA. Some use EBITA mistakenly instead of EBITDA because it sounds very similar. However, there are no real reasons to use EBITA instead of EBITDA. 

 

EBITA formula


EBITA = Pre-tax profit + Financial expenses - Financial income + Amortization


(EBITDA = EBITA + Depreciation)


As you can see EBITDA is additionally before depreciation and is a better measure to use in most cases. If someone thinks that depreciation is very important for company because of needed capital investments in tangible assets, then he could use such ratio as ‘EBITDA – Capex’ or ‘CFFOCapex’ while these two can be really helpful in practice. 

 

 






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