EBITA

EBITA views D as a real cost to business, if your depreciating and asset on your books, chances are its also actually wearing down. And yes, for a mature company you could assume that Depreciation is equal to CapEX so they'd be the same.

Just to add a few additional comments to the thewaterpiper's fairly thorough post.

• The A is highly discretionary as the company has to value its customer relationships and no company is going to value this the same in their calculations. -The A is only really important for tax purposes as sometimes the acquired customer relationship can be tax deductible which can reduce cash tax paid which is a good thing! -Some companies can be sneaky and exclude all amortisation including that of capitalised software under IFRS from the earnings metric that management uses to get paid but unfortunately Boards seem to ignore this in setting management comp and encourage over capitalisation which typically ends up with high EBITA and EPS excluding amortisation but poor FCF. There have been a number of disasters from over capitalisation of costs.

I'd also be carefully, especially with European companies, that EBITA can be EBIT adjusted so they adjust out all sorts of other operating items such as restructuring, pension curtailment gains and M&A adviser fees on acquisitions. This is fine when it is a one-off case but companies can repeatedly exclude restructuring costs from the metric that they are paid on.

At the end of the day, amortisation of acquired intangible is an accounting metric which has no impact on cash bar the taxes and I tend to ignore it in my assessment of underlying earnings/valuation by looking at the FCF.