Most important line on Income Statement?
For IB SA interviews, "what's the most important line on Income Statement and why?"
I said Net Income, another interviewer said EBIT....
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Probably operating profit...which is EBIT. Tells you the income from operations while disregarding interest/tax considerations.
either EBITDA or EBIT depending on the company/industry, imo (yes, I know EBITDA is BS 99% of the time so you need to take it with a grain of salt). I think the point of the question is to find the closest line item that's a proxy for FCFF
Yes, however, no GAAP income statement will ever have EBITDA on it. They probably want to see your knowledge of what exactly is on the IS, as well as what each line item means. You would have to know that operating profit is on the IS, that it is the same as EBIT, and that EBIT measures the income from operations of a business.
After that, you can then explain how you would make adjustments to get to EBITDA depending on the industry. But if you were given a company's IS and asked to pick the most important line item, you wouldn't find EBITDA since it's a non GAAP metric.
Ah sorry, blanked out for a second and just glanced over the question without closely thinking about the question. You're right, EBITDA isn't separately listed.
Sorry to say, but Net Income would have literally been my last choice; a lot of shit can happen between EBIT and NI.
Just for reference to all the prospective monkeys, if asked this question for a Tech group, the correct answer is probably revenue growth.
Was just about to say this. Probably best to ask which industry this is for as a follow up question. If they don't specify I would go with EBIT.
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