The Top 5 Adjustments to Consider When Computing EBITDA

Posted by Margaret Amsden and Benjamin Smith on August 15, 2017

Margaret Amsden

Owners of closely held businesses use a myriad of metrics to evaluate business performance.  Alternatively, when a buyer or third party is looking at a business’s value or performance, they often use the company’s Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as the key metric to represent the company’s ability to generate cash flow.  This is primarily because EBITDA is not impacted by the equity structure of the business, and is a neutral guide as to whether a business is funded with debt or equity. Since EBITDA is a key factor used in assessing a …

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