All of the following are reasons why EBITDA is an important metric when performing a comparable companies analysis EXCEPT:
A) It represents a more accurate look at a company's operating cash flow
B) It is free from differences resulting from capital structure
C) It represents the profit after all of a company's expenses have been netted out
D) It is free from differences in tax expenses

Question

All of the following are reasons why EBITDA is an important metric when performing a comparable companies analysis EXCEPT: 
A) It represents a more accurate look at a company's operating cash flow
B) It is free from differences resulting from capital structure
C) It represents the profit after all of a company's expenses have been netted out
D) It is free from differences in tax expenses

Quizplus · Accepted Answer

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) does not represent the profit after all of a company's expenses have been netted out. Instead, it excludes interest, taxes, depreciation, and amortization to provide a clearer view of a company's operational performance without the effects of financing and accounting decisions.

All of the Following Are Reasons Why EBITDA Is an Important