What Is Economic Profit? An economic profit is the difference between the revenue received from sales and the explicit costs of producing its goods and services, as well as any opportunity costs. Opportunity costs are a type of implicit cost determined by management and will vary based on different scenarios and perspectives. Key Takeaways Economic profit
What Was the Economic Recovery Tax Act of 1981? The Economic Recovery Tax Act of 1981 (ERTA) was the largest tax cut in U.S. history. Signed by President Ronald Reagan about six months after he took office, ERTA slashed the top income tax rate and allowed for faster expensing of depreciable assets. It included incentives
What Is an Economic Refugee? An economic refugee is a person who leaves his or her home country in search of better job prospects and higher living standards elsewhere. Economic refugees see little opportunity to escape poverty in their own countries and are willing to start over in a new country for the chance at a better
What Is Economics? Economics is a social science that focuses on the production, distribution, and consumption of goods and services, and analyzes the choices that individuals, businesses, governments, and nations make to allocate resources. Key Takeaways Economics is the study of how people allocate scarce resources for production, distribution, and consumption, both individually and collectively.The two
What Is an Economic Shock? An economic shock refers to any change to fundamental macroeconomic variables or relationships that has a substantial effect on macroeconomic outcomes and measures of economic performance, such as unemployment, consumption, and inflation. Shocks are often unpredictable and are usually the result of events thought to be beyond the scope of
What Is the EBITDA-To-Sales Ratio? The EBITDA-to-sales ratio, also known as EBITDA margin, is a financial metric used to assess a company’s profitability by comparing its gross revenue with its earnings. More specifically, since EBITDA itself is derived in part from revenue, this metric indicates the percentage of a company’s earnings remaining after operating expenses.
What Is the EBITDA-to-Interest Coverage Ratio? The EBITDA-to-interest coverage ratio is a financial ratio that is used to assess a company’s financial durability by examining whether it is at least profitable enough to pay off its interest expenses using its pre-tax income. Specifically it looks to see what proportion of earnings before interest, taxes, depreciation
What Is EBITDA/EV Multiple? The EBITDA/EV multiple is a financial valuation ratio that measures a company’s return on investment (ROI). The EBITDA/EV ratio may be preferred over other measures of return because it is normalized for differences between companies. Using EBITDA normalizes for differences in capital structure, taxation, and fixed asset accounting. The enterprise value
What Is Earnings Before Interest, Taxes, Depreciation, Amortization, and Special Losses (EBITDAL)? Earnings before interest, taxation, depreciation, amortization, and special losses is a non-GAAP measure of a firm’s income that takes into account special losses that the firm does not expect to occur on a regular basis. EBITDAL is a variation on the more commonly used
What Is EBITDA Margin? The EBITDA margin is a measure of a company’s operating profit as a percentage of its revenue. The acronym EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Knowing the EBITDA margin allows for a comparison of one company’s real performance to others in its industry. Key Takeaways The EBITDA
