Operating income before depreciation and amortization
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OIBDA differs from EBITDA because its starting point is operating income, not earnings. It does not, therefore, include non-operating income, which tends not to recur year after year. It includes only income gained from regular operations, ignoring items like FX changes or tax treatments.
Historically, OIBDA was created to exclude the impact of write-downs resulting from one-time charges, and to improve the optics for analysts comparing to previous period EBITDA. An example is the case of Time Warner, who shifted to divisional OIBDA reporting subsequent to write downs and charges resulting from the company's merger into AOL.
In each case OIBDA, OIBTDA, and EBITDA are proxies for analyzing the cash a firm can generate from operations irrespective of capital structure and taxes, and is therefore very useful as a tool in designing restructurings, mergers and acquisitions, and recapitalizations, and for valuing firms on a TEV (total enterprise value) basis.
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