EBITDARM

A A A

DEFINITION

A financial performance measure that stands for earnings before interest, taxes, depreciation, amortization, rent and management fees. EBITDARM is used in comparison to more common measures such as EBITDA when a company's rent and management fees represent a larger-than-normal percentage of operating costs.




INVESTOPEDIA EXPLAINS

EBITDARM is not a measure in accordance with generally accepted accounting principles (GAAP), but is instead used for internal analysis and for presentation to investors and creditors. It is also reviewed by credit rating agencies when assessing a company's overall debt servicing ability and credit rating, which is an important factor, as many of the companies who present this measure carry high debt loads.

EBITDARM is most likely to be found in the statements of a healthcare company, such as a hospital or nursing facility operator. Industries such as these often lease the spaces they use, so rent fees can become a major operating cost. EBITDARM may be measured against rent fees to see how effective capital allocation decisions are within the company, and to review its ability to service debt.

Measures like EBITDARM are most informative to investors if they are examined in conjunction with net earnings and more refined non-GAAP measures like EBITDA and EBIT.


RELATED TERMS
  1. Amortization

    1. The paying off of debt in regular installments over a period of time. 2. ...
  2. Earnings Before Interest & Tax ...

    An indicator of a company's profitability, calculated as revenue minus expenses, ...
  3. Credit Rating

    An assessment of the credit worthiness of a borrower in general terms or with ...
  4. Earnings Before Interest, Taxes, ...

    An indicator of a company's financial performance which is calculated in the ...
  5. EBITDA-To-Interest Coverage Ratio

    A ratio that is used to assess a company's financial durability by examining ...
  6. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding share of common ...
  7. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment or to ...
  8. Billing Cycle

    The interval of time during which bills are prepared for goods and services ...
  9. Subprime Meltdown

    The sharp increase in high-risk mortgages that went into default beginning in ...
  10. Event Risk

    1. The risk due to unforeseen events partaken by or associated with a company. ...
Related Articles
  1. What Is A Corporate Credit Rating?
    Investing Basics

    What Is A Corporate Credit Rating?

  2. How To Evaluate The Quality Of EPS
    Markets

    How To Evaluate The Quality Of EPS

  3. EBITDA: Challenging The Calculation
    Options & Futures

    EBITDA: Challenging The Calculation

  4. What's the difference between EBITDA, ...
    Investing

    What's the difference between EBITDA, ...

  5. What Is Market Efficiency?
    Active Trading

    What Is Market Efficiency?

  6. Free On Board
    Professionals

    Free On Board

  7. Getting On The Right Side Of The P/E ...
    Fundamental Analysis

    Getting On The Right Side Of The P/E ...

  8. An Introduction To The CMA Designation
    Professionals

    An Introduction To The CMA Designation

  9. Herding Tendencies Among Analysts
    Investing Basics

    Herding Tendencies Among Analysts

  10. Understanding Leveraged Buyouts
    Fundamental Analysis

    Understanding Leveraged Buyouts

comments powered by Disqus
Hot Definitions
  1. Cash and Carry Transaction

    A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.
  2. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  3. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  4. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  6. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
Trading Center