What does EBITDA mean in FUNNIES

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of the operating profit of a company before taking into account these four non-operating expenses which are often excluded in order to get an apples-to-apples comparison with other businesses.

No, EBITDA is not the same as net income. Net income reflects all expenses associated with running a business - including taxes and depreciation - while EBITDA does not take into account interest payments or non-cash expenses such as depreciation and amortization charges.

Yes, there are some drawbacks to relying solely on EBITDA for valuation purposes. Because it does not take into account interest payments or non-cash expenses such as depreciation and amortization charges, it can be misleading in assessing the true financial health of a company. Additionally, two companies may each have similar levels of operating profits but vastly different levels of debt; this would be masked by using only EBITDA as an indicator of value when comparing them.

Yes, it can make sense to use EBITDA when comparing similar businesses or when evaluating companies that don't have significant amounts of debt or capital expenditure requirements. In these situations where it may be difficult to draw meaningful conclusions from net income alone due to varying inputs from one company to another, using relevant metrics like EBITDA can provide greater clarity on how much cash they are generating from their operations.

The formula for calculating your company's EBTIDA usually involves subtracting taxes (income tax + social insurance contributions), interest payments (interest received/paid), depreciation/amortization (total depreciation/amortization for fixed assets/intangible assets) from your total earnings (net sales — cost of goods sold).