Earnings Before Interest, Tax, Amortization And Exceptional Items - EBITAE

AAA

DEFINITION of 'Earnings Before Interest, Tax, Amortization And Exceptional Items - EBITAE'

An accounting metric often used to deduct the amortization of intangible assets to arrive at a value. Companies will use EBITAE not only as a measure of performance, but also to determine interest coverage capabilities. The eliminated items are often seen as factors that distort earnings that are derived from the underlying business operations of a firm.

Calculated as:

Earnings Before Interest, Tax, Amortization And Exceptional Items (EBITAE)

Where expenses* represents expenses that exclude interest, taxes, amortization of intangible assets and exceptional items.

INVESTOPEDIA EXPLAINS 'Earnings Before Interest, Tax, Amortization And Exceptional Items - EBITAE'

When evaluating EBITAE, investors will look at the figure as a percentage of revenue and they will also measure EBITAE margin. Both the percentage and margin will be compared to previous years' figures to evaluate performance. This ratio is very similar to the EBITDA, a very popular performance measure often used by investors.

RELATED TERMS
  1. Amortization

    1. The paying off of debt in regular installments over a period ...
  2. Earnings Before Tax - EBT

    An indicator of a company's financial performance calculated ...
  3. Extraordinary Item

    Gains or losses included in a company's financial statements, ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. Earnings Before Interest, Taxes, ...

    An indicator of a company's financial performance which is calculated ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Related Articles
  1. Insurance

    Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.
  2. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  3. Investing

    What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally expensed based on the time period over which the asset was ...
  4. Markets

    Introduction To Fundamental Analysis

    Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
  5. Fundamental Analysis

    What's a Prospectus?

    The Security and Exchange Commission (SEC) requires that any company raising money from potential investors through the sale of securities must file a prospectus with the SEC and then provide ...
  6. Trading Strategies

    5 Ways To Adapt To Tough Markets

    Tough markets undermine profitability and lower self-confidence. Fight back with five simple but powerful rules of engagement.
  7. Fundamental Analysis

    What's a Tangible Asset?

    Tangible assets are property owned by a business that can be touched -- they physically exist. Examples include furniture and fixtures, computer hardware, delivery equipment, leasehold improvements ...
  8. Fundamental Analysis

    Equity Multiplier

    The equity multiplier is a straightforward ratio used to measure a company’s financial leverage. The ratio is calculated by dividing total assets by total equity.
  9. Fundamental Analysis

    Cash Flow From Operating Activities

    Cash flow from operating activities is a section of the Statement of Cash Flows that is included in a company’s financial statements after the balance sheet and income statements.
  10. Fundamental Analysis

    What's Net Debt?

    Net debt is one of the many metrics used to measure a company’s ability to pay its debts. There are other metrics such as net liquidity ratio, cash conversion cycle and the debt to equity ratio, ...

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center