Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
- The firm’s
NOPAT = $115,depreciation expense is $12.5, amortization expense is $0, and interest expense is $15 and tax rate = 30%. What is the firm’s EBITDA?
Expert Solution
Step 1
EBITDA (Earnings before interest, tax, depreciation & amortization):
It is one of the metrics used widely to know about a company's profitability. Hence, it becomes a good measure to compare various companies and the industry with the firm.
It helps in eliminating irrelevant factors and therefore provides a better comparison between various companies.
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