Which of the following is not true regarding EBITDA?
A) EBITDA is less than or equal to EBIT.
B) EBITDA is not affected by a company's capital structure.
C) EBITDA is operating earnings before depreciation and amortization.
D) EBITDA is useful when comparing companies that operate in the same line of business.

Question

Quizplus · Accepted Answer

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is actually higher than or equal to EBIT (Earnings Before Interest and Taxes) because EBITDA adds back depreciation and amortization expenses to operating income, which are subtracted in the calculation of EBIT.

Which of the Following Is Not True Regarding EBITDA