EBITA
When would you look at EBITA vs. EBITDA or EBIT?
Also, what would be the difference in EBIT and EBITDA - Capex multiples? For a mature company, shouldn't they be approximately the same?
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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.
There seems to be a ridiculous number of new threads recently about EBITDA / EBITA / EBIT / EBITDA - Capex... A search bar exists on this site.
OP, regarding your 1st question. EBITA is usually meant to be ' EBIT + amortisation of acquired intangibles', i.e. intangibles that are recognised and written-up through acquisitions - so, it doesn't include for instance, amortisation of software that has been purchased. It is effectively a 'clean' version of EBIT. In terms of explanation - imagine 2 identical companies, one gets acquired, and through purchase price allocation, gets a bunch of intangibles recognised (e.g. customer relationships). The acquired company will start having an additional amortisation line item, which means its EBIT will be lower than the 1st company, even though they are operationally identical. Thus, you add back the amortisation to normalise the two companies, so EBITA will be the same.
Yes, for a mature company, you would expect EBIT and EBITDA-capex to be the same. For a growing / declining company, this relationship may not hold - hence why people look at metrics like EBITDA and EBITDA-capex.
Just to add a few additional comments to the thewaterpiper's fairly thorough post.
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.
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