ebitdar
CF
Tags:
(Baboon, 142
Points)
on 6/26/12 at 11:36am
Let's say I'm calculating Total Debt (including present value of operating leases) to EBITDA. Would it make sense for me to add back rent expense to EBITDA, i.e. use EBITDAR instead?





No.
No.
See my other WSO blog posts
No need for PV of Op Leases.
No need for PV of Op Leases. If leases are significant, then you should probably do a lease-adjusted leverage of: (Total Debt + 8*Operating Leases [multiple depends on industry]) / EBITDAR
Both methods can be used (PV
Both methods can be used (PV and multiple). S&P takes PV whilst Moody's uses a multiple.
For a list of multiples for various sectors, see: www.elfaonline.org/cvweb_elfa/product_downloads/ml...
Also note that it is only useful to look at adjusted EV/EBITDAR if leases are material and vary across your comparables. Some examples of industries where this may be meaningful are supermarkets (some companies own their property, some have leasebacks, etc), and airlines (different airlines have varying lease:own ratios for their fleet)