What is EBITDA? Explained | Part 2 - Beginner's Guide to Company Finances

This video explains the meaning of EBITDA and why it is used for analysing business financials when picking shares and stocks. This metric allows us to see if a company is undervalued or overvalued when compared to a similar company in the same sector or industry.
EBITDA stands for earnings before interest, tax, depreciation and amortization. Earnings is the money that the business makes after deducting all cost of goods and costs of doing business. Interest is the money paid to the bank or financier to service borrowed money. Tax is paid as a percentage to the government. Depreciation is a gradual decline in value of capital, and amortization is a gradual write off of intangible assets.
Now that the textbook answer is out of the way, the main point of EBITDA is to work out the unbiased earnings ability of a company and using it to value that company at a fair and reasonable price. Because ultimately the value of a company only comes from its ability to earn money, and if it’s not earning now, then it’s ability to earn in the future. It is probably one of the most important company metrics to take into account. If the company is a dividend paying stock, then a healthy EBITDA will ensure steady and consistent dividend payouts. If the company is a growth stock, then a strong EBITDA will ensure its growth into the future. Whatever you use EBITDA for, ensure that it is growing every year and you’ll end up on top.
Disclaimer: The information on this video is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser. I am not sponsored by any listed companies and all information provided is purely from my opinions of the stocks available at the time of uploading this video.

Видео What is EBITDA? Explained | Part 2 - Beginner's Guide to Company Finances канала The Healthy Investor