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
What Is EBITDAR? Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) is a non-GAAP tool used to measure a company’s financial performance. Although EBITDAR does not appear on a company’s income statement, it can be calculated using information from the income statement. Key Takeaways EBITDAR is a profitability measure like EBIT or
What Is EBITDARM? EBITDARM (earnings before interest, taxes, depreciation, amortization, rent, and management fees) is a selective earnings metric employed to measure the financial performance of certain companies. EBITDARM is compared to more common measures, such as EBITDA, when a company’s rent and management fees represent a larger-than-normal percentage of operating costs. Key Takeaways EBITDARM stands for earnings before
What Is EBITDAX? EBITDAX is an indicator of financial performance that is used when reporting earnings, specifically for oil and mineral exploration companies. The acronym stands for “Earnings Before Interest, Taxes, Depreciation (or Depletion), Amortization, and Exploration Expense.” Key Takeaways EBITDAX is a valuation metric used for oil and gas companies that measures a firm’s
What Is the EBIT/EV Multiple? The EBIT/EV multiple, shorthand for earnings before interest and taxes (EBIT) divided by enterprise value (EV), is a financial ratio used to measure a company’s “earnings yield.” The concept of the EBIT/EV multiple as a proxy for earnings yield and value was introduced by Joel Greenblatt, a noteworthy value investor
