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EBIT & EBITDA

EBIT is Earnings before interest and taxes. It indicates the profitability of a business. EBIT is determined as the balance of revenue minus expenditures without including interest and tax. EBIT is a measure of operating incomes or operating profits before taxes and interests.

EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a metric for evaluating the operating performance of a company. EBITDA is a cash flow proxy for the entire operations of the business.

Determining EBITDA leaves out non-operating costs and some non-cash expenses. It ignores factors where the business owner has discretion over such as capital structure, debt financing, and some taxes.

EBITDA portrays the company's financial performance while ignoring to account for the capital structure.

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