Why do we use EV/EBITAR (if a company has large rent expenditures), but whenever we are valuing a company that has a lot of D&A we use EBIT rather than EBITDA...so why does this principle not overlap with EBITDAR?
| +423 | Don’t work at UBS - UBS Sucks | 37 | 12h |
| +327 | Article - UBS’ Investment Bank Keeps Losing Ground | 41 | 1d |
| +146 | Should My Intern Get a Return Offer? | 48 | 2h |
| +61 | When to Leave Office as Intern | 8 | 4d |
| +60 | Best IB Group Overall? | 35 | 57m |
| +54 | F*ck it I'm Going to Med School | 19 | 7h |
| +39 | Would you rather be a Touse Squid or a Bouse Mogger in IB | 2 | 4d |
| +37 | What do you say to ppl who don’t know EVR/LAZ/CVP/PJT | 29 | 5h |
| +31 | STEM student lost in London IB recruiting | 17 | 3d |
| +27 | [HELP REQUESTED]: Take A2A Promo or Go Corp Dev | 12 | 7m |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
I think you are mixing the concepts slightly. The reason for using EV/EBITDAR is to compare the relative pricing between companies, such as airlines, regardless of the financing of the airplanes.
You may want to think more conceptually about the different metrics and their uses. If you think high-level about it, EBITDA is meant to serve as a proxy for free cash flow. When doing an LBO, you want to understand how much debt you can take on the company you are acquiring, often referenced in a multiple of EBITDA. However, if the company requires a lot of CAPEX each year to sustain the current revenue levels, you may not get permission from the bank to take on the debt you want, meaning that a multiple of EBIT may be a more suitable metric.
Corporis nam beatae impedit. Labore consequuntur quis quod repudiandae fuga. Ea iure repellendus porro sunt. Ullam neque ut sit placeat. Est quis aut rem nemo.
Expedita impedit eligendi rerum qui. Consequuntur voluptas quis facilis quasi. Autem culpa vero voluptas omnis.
Est cumque sit et eius quia et. Non vel et commodi illo laboriosam maiores. Architecto natus velit quia minima nulla enim. Maxime doloremque minus dolor rerum incidunt. A inventore hic sed pariatur ea qui consequuntur. Atque labore fuga corporis officiis nesciunt aperiam voluptatibus temporibus. Autem non rerum sed praesentium provident tempore.
Ducimus distinctio qui nostrum mollitia dolores vel nemo. Neque ad reiciendis aut quis dolorum deleniti magni. Eveniet eligendi esse mollitia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...