Adjusted EBITDA
What is it?
Adjusted EBITDA is a key performance indicator that measures the operating profit of a property or business before interest, taxes, depreciation, and amortization, adjusted for one-time or unusual expenses/incomes. It provides a clearer view of the operational profitability by excluding costs not directly related to day-to-day operations.
How is it calculated?
Revenue − (Operating Costs + Depreciation + Amortization)
* Only includes selected accounts in settings.
** Includes only net for specified time period.
Why is it important to follow?
Tracking adjusted EBITDA is important for several reasons:
Operational profitability
This metric provides a clear picture of profitability without considering financial, tax-related factors, or depreciation. It’s crucial for assessing how efficiently the business generates profits from day-to-day operations.
Comparability
By adjusting for one-time or unusual expenses/incomes, EBITDA becomes a more comparable metric across different properties, projects, or businesses, making analysis and decision-making easier.
Investment decisions
Investors and property owners often use adjusted EBITDA to evaluate the return on their investments and to make decisions on future investments.
Cost control
Adjusted EBITDA helps identify operational inefficiencies and offers an opportunity to reduce costs or increase revenues.
Financial health
A strong EBITDA result indicates that the operation is stable and generates enough profit to cover its operating costs and foster growth.
Created by Homepal
10/1/2024
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