Which item is excluded from EBITDA?

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Multiple Choice

Which item is excluded from EBITDA?

Explanation:
EBITDA shows earnings before interest, taxes, depreciation, and amortization, so it removes non-cash charges to focus on cash earnings from operations. Depreciation is excluded because it’s a non-cash expense used for allocating asset costs over time; EBITDA adds back depreciation to EBIT to reflect cash profitability. Revenue, operating expenses, and even sales discounts all figure into the earnings measure that EBITDA starts from, with depreciation and amortization the only adjustments made back.

EBITDA shows earnings before interest, taxes, depreciation, and amortization, so it removes non-cash charges to focus on cash earnings from operations. Depreciation is excluded because it’s a non-cash expense used for allocating asset costs over time; EBITDA adds back depreciation to EBIT to reflect cash profitability. Revenue, operating expenses, and even sales discounts all figure into the earnings measure that EBITDA starts from, with depreciation and amortization the only adjustments made back.

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