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Use cases of EV/EBITDA and EV/EBIT
I currently ask myself, under which scenarios I would either use EV/EBITDA or EV/EBIT, as I came across different sources online and everyone seems to say something different. To my understanding, EV/EBIT is best used for industrial companies, as they are Capex intensive and therefore have high...
Difference between underlying EBITDA and adjusted EBITDA
Are there any differences between underlying EBITDA and adjusted EBITDA or are they the same?
simple LBO question: taxes and interest expense?
hi team... i am confused. scenario below: Tax rate = 40% EBIT = $150 Interest expense = $100 Every template LBO model I see would calculate taxes by taking $150 - 100 = $50 * 40%... However, I am also seeing online that interest expense is not fully tax deductible... that there is a 30% limit of...
cash free debt free basis? who pays off pre-transaction debt?
hello team. i am confusing myself badly and would appreciate your help here. example: Buyer offers seller $1B TEV, cash-free debt-free basis. Seller has $200M of existing debt on the business and $100M in cash. So prior to or at close, seller uses the $100M of cash to pay down debt to now $100M. but...
Multiples
I have 2 questions regarding multiples: 1. is it possible to include EBITDA growth in multiples? 2. how can I calculate the EBITDA margin with multiples only?
EBITDA multiple Changes
Let's say the corporate tax rate drops from 21% to 15%. How does that affect a company's EBITDA multple? Would the EBITDA multiple go up? Why?
what is management ebitda? same as reported ebitda?
what does "management ebitda" mean? have seen that come up a few times. is that just the same as reported ebitda? and not adjusted ebitda? thanks so much team!!
backing into purchase price by looking at balance sheet? help needed
hi team - is this possible? looking at a balance sheet of a PE backed portco (recently acquired) and trying to figure out what the purchase price was. long-term debt is $200M Total stockholder equity is $500M.... of that $500M, $10M is common stock and $490M is additional paid-in capital To back...
TAM vs. whitespace opportunity?
hi guys - what exactly is the difference here? is whitespace a subset of TAM? so if TAM is $1B, whitespace might be $100M that's actually serviceable to a Company? from what i understaND, TAM is the total revenue opportunity assuming 100% market share. so is whitespace the portion of that pie that...
where to find ARR of public companies?
hi everyone - is ARR listed out somewhere on financial statements for public cos? i only see total revenue. is there a way to look at 10-k, 10q, etc. and figure out ARR if it's not explicitly stated? thanks so much!
Easy questions on arr and run rate
Hi guys. Easy questions below. 1. what’s the difference between annual recurring revenue and run rate? Aren’t these basically the same? 2. I don’t understand when I’m looking at a CIP when they say “projecting 2023 run rate revenue of $10m.” Why wouldn’t you just say 2023 revenue of...
M&A: pre / post money valuations. Easy question
Hi everyone. Can someone please help answer my conceptual questions below? Thanks so much 1. As a buyer, imagine I am evaluating a target. I am trying to figure out how much to pay for the business. I can see the target’s latest financing round and valuations. What is more important for me to look...
pre vs. post money valuation? purchase price? so confused!
hi team... 1st scenario: assume I am a buyer assessing a potential target. this potential target had a recent financing round and you can see both the pre and post money valuation from the round... which metric (pre or post) would be more relevant for helping me, the buyer, determine how much i...
cash burn? ebitda? so confused!
hi all. can someone please explain intuitively what cash burn means? and what this means in relation to ebitda? if a company is burning cash, does that mean there is no ebitda? for example, how would one interpret "10M cash burn" ? thanks so much...
financeable EBITDA vs... EBITDA? what is the difference?
hey guys - what's the difference between financeable EBITDA and.... non financeable EBITDA? and what are the differences in the calcs? been reviewing some buyside / LBO / lender model materials and keep seeing this term "financeable ebitda" thanks all!
gaap vs. cash ebitda? What?? confused.
if ebitda is a non-gaap metric, why do i sometimes see "gaap vs. cash ebitda"? very confused here. how can there be a "gaap" ebitda? and then what's cash ebitda? thanks team! appreciate all the help
EBITDA bridges: easy question
hi team. i'm looking at an EBITDA bridge right now and I am confused. on the lefthand side, we start with Q3 2020 LTM EBITDA. On the far right side, the bridge ends at full year 2020A EBITDA. In between obviously there are a bunch of steps. How can you bridge from Q3 2020 LTM EBITDA to full year...
Understanding Enterprise Value, Help??
Hey, I have an interview and I really can't understand why we add debt to equity value on the enterprise value. Doesn't the equity value already automatically discount the debt and thus only the real amount to be paid is left? I read that the buyer always was to pay for the debt but I just can't...
Private Company Valuation
Hi All, I am estimating the enterprise value of a private company using the market approach and more specifically the EV/Ebitda and EV/Sales multiples(not transaction). My first question is; do i have to adjust the enterprise value for Discount for lack of Marketability since i am using multiples of...
EBITDA
Is it possible to use the current EBITDA margin of a company to forecast its future EBITDAs? thank you for your response
Treatment of earned but not received rent in EBITDA and NOI CA definitions
Question on how REIT rental revenue that been earned but not paid. I am underwriting a borrower that has seen ~90% rental collections during the pandemic. The proposed definitions for EBITDA and NOI in the credit agreement adjust out "non-cash" items. My question though is whether non-cash items...
Cash EBITDA definition
What does Cash EBITDA mean? What's the **difference **with EBITDA? Any example would be very much appreciated.
Forward EBITDA vs. LTM
When valuing a company through the comparables methodology, why do we apply the transaction multiple result to LTM EBITDA and trading multiples result to forward EBITDA?
Best Site for EBITDA Shirts/Hats/Accessories
Stumbled across Bull And Bear Clothing when searching for an "I
Alternative meanings of "EBITDA"
So a colleague and I were bored at work and started brainstorming different phrases that EBITDA could stand for. The best we came up with was: Everyone's Busy If The Director Asks Can anyone else think of a funny / applicable definition for this ubiquitous finance term?
Why are EBITDA Multiples Different for Similar Companies?
Interview question I got--Why would two similar companies, same industry, same growth prospects have different ebitda multiples? What about different P/E multiples? P/E or EV / EBITDA Multiples for Similar Companies When looking at two companies in the same peer group, with similar profiles and the...
EBIT or EBITDA
Hi guys, I'm trying to learn some basic IB technicals and was really hoping for help with a few concepts please: 1. Isn't it better to value a company using EBIT rather than EBITDA because EBIT accounts for DA which is significant expense on the income statement? 2. Do people in investment banks...
Adjusted EBITDA - Top down vs. Bottom up
Monkeys - which of the two approaches are you using to calculate EBITDA , top down or bottom up? What line of work are you in? I'm in corporate banking and have always gone the top down route (I.e. Revenues - cogs - opex +/- non-cash and non-recurring items embedded within the aforementioned...
EBITDA Question Bubble Gum Co
Bubble Gum Co.’s operating profit is 5,000. It has a litigation charge of 1,000 in SG&A. D&A is 500. What is EBITDA ? I thought the answer would be $4,500. EBIT or operating income = Revenue -Expenses so $5000-$1000 of litigation expense. and then add D+A which would be $4000+$500=$4,500 turns out...
How do PE Firms Create Value Beyond Margin Improvement and EBITDA Growth?
Hello, Could anybody perhaps offer insight on some of the more nuanced tricks private equity firms use to create value in their portfolio companies? For instance, do they sell all real estate and lease instead, try to reduce underfunded pensions in some way, do other accounting / finance tricks to...
Best email I've gotten in a while
I'm working one morning and a friend of mine from when we were in banking (he's in PE, I left PE for a startup) sends me a note with a subject that says "Which banker do you think I was behind this morning?" I opened the email and there's just a picture. I literally fell on the floor from laughing...
Depreciation in COGS
I am working on the factory financial model . Therefore, depreciation costs of the Plant and Equipment are included in COGS, as these fixed assets are used in the direct production of the inventory. My question is - as far as all the fixed assets company owns is just an equipment that is used in...
Depreciation in COGS and EBITDA
I am working on the factory financial model. Therefore, depreciation costs of the Plant and Equipment are included in COGS, as these fixed assets are used in the direct production of the inventory. My question is - as far as the company owns only assets that are used in production (and no other...
How Do You Pronounce EBITDA?
Fairly simple exercise here: How do YOU pronounce EBITDA , phonetically? I'm partial to "e-bit-dah" with a an emphasis on the "E" and "dah" being pronounced almost like the Russian word. How Do You Say EBITDA? Consensus among our users is that EBITDA should be pronounced as: ee-bit-dah The below...
Adjusted EBITDA in DCF Valuation?
Do we use an EBITDA figure that has been adjusted for one-time, non-recurring items in the DCF calculation? If not, where do these adjustments go? Much appreciated.
Which Taxes Should I Add Back to EBITDA?
Noob intern here arguing with other noob interns. So us noobs understand that you simply add interest, taxes, depr. and amor. back to net income to get EBITDA . However, we're looking at a company's income statement and there's income tax along with payroll taxes under operating expenses. My...
Help with a Simple Technical Question
If there are two companies with same industry, same region, similar cap structure, Wacc/discount rate, same capex, working capital. One has a higher margin on its sales, one has a lower margin on its sale. Which would be trading at a higher EBITDA multiple if their EBITDA is the same? I'm trying to...
EBITDA vs. Operating Cash Flow vs. Free Cash Flow
Moderator note (Andy): this is a post from 2010 but squawkbox suggested its relevancy remains and can be very useful for those going through FT & SA interviews. "Don't beat it to hell because it's missing some small details, but it's good for what someone will need in the "hotseat" during the...
A Firm's Value
Have you ever wondered how investment banks or financial advisors calculate a firm’s value exactly? In order to evaluate company X during an M&A transaction, a peer group of comparable companies (Company A and Company B) have to be selected. Subsequently, various key performance indicators have to...
EV/EBITDA vs EV/EBIT vs EV/(EBITDA-capex)? Please help?
Hi guys, Could someone please help explain the difference of when to use EV /EBIT vs EV /( EBITDA -capex)? I know you generally use EV /EBIT for companies with high capex, why though? Because of the high D&A, but don't you want to account for that? like EBITDAR for airlines, gaming/casinos, etc? I...
Bloomberg vs. ThomsonOne Data
So, I'm working on a report for my school's investment club and got most of my data from a Bloomberg terminal. After realizing I needed a few more numbers while already back in my dorm, I logged on to ThomsonOne. Many of the numbers are different between the two services for apples to apples...
EBITDA Multiple Basic Question
If I know a company was acquired for 8x TTM EBITDA recently, does this mean that the company's equity was purchased for 8x TTM EBITDA , or does the 8x refer to the company's EV , from which I'd need to back out the debt and cash to arrive at the price paid for the equity? Many thanks!
Difference between "Property Ebitda" and (regular) "EBITDA"
Hi Guys, Looking at a bank book, but am stuck on a term - Can anyone help me quickly on the difference between ebitda and property ebitda? Thanks
Why is EBITDA popular?
Hey guys I am just a little confused why EBITDA is used so much? I understand it may be appropriate to ignore depreciation charges when valuing certain companies but why would you ignore interest and tax payments? These charges are real cash outflows that cannot be avoided so I am curious what the...
Historical EV/EBITDA Multiples
Hello, How would you compute historical EV / EBITDA multiples for a listed company in order to compare them with the actual multiple? Let's say the current date is 31 Dec. 2011, the company fiscal year ends on 31 Dec., hence to compute the actual 2011 multiple I use the market capitalization and...
EBITDA Ambiguity - if EBITDA excludes Depreciation and Amortization, why do we subtract D and A from it to get EBIT?
I dont really get EBITDA . It is earnings before all that so I assumed that it contained D and A. but if it excludes D and A, how can we subtract D and A to get Ebit? Wouldnt that be subtracting a non existent thing? Thanks!
Help Valuing A Very Negative Company
Currently working on valuing a very indebted retail company for potential takeover and having serious troubles. Operating Income is negative, EPS is negative, Net Income is negative, EBITDA is negative and jumping all over the place, Retained Earnings is negative (and growing), Cash & CE is...
When To Use EBIT vs EBITDA Multiples?
Obviously the difference between the two multiples is D&A, so for a company/industry with lots of D&A, should you use EBITDA or not? I could see it being argued either way--i.e. if D&A is a large factor, don't use EBITDA because that ignores an important aspect of the company's financials...or USE...
Pre-Corporate EBITDA
Anyone know what this is/why this is used? Google says this is EBITDA minus the SGA. Is that correct?
Deal size in Cover Letter
Hey, I know it is easy to fluff up anything in a resume or cover letter. ie shredding paper as an intern: "regularly maintaining corporate security process" (you all know what im talking about) anyway, Im interning in M&A now and want to know if reporting deal size's I worked on is what recruiters...
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