EBDIT is an initialism or acronym for Earnings Before Depreciation, Interest and Taxes.
Some people find it useful to know this value for a business. On the other hand, some businesses may emphasize this value in publicity or reports to investors, instead of the GAAP or other standard earnings or income value.
In finance, EBDIT is sometimes used in capital budgeting calculations as a starting point in order to create templates that can be easily changed to observe the effects of changing variables (such as tax rates, allowances for inflation or changes in depreciation methods) on a Net Present Value (NPV) or Internal Rate of Return (IRR) value, and thus, the viability of a potential investment or project.
- Frino, Hill & Chen (2009), "Introduction to Corporate Finance" 4th ed.
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