EBITDAR

Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent

EBITDAR stands for Earnings Before Interest, Taxation, Depreciation, Amortization and Rent. This is used over EBITDA when the firm in question has extremely high rental expenditure (airlines, shipping companies, generally anything which rents large amounts of capital). The reason for using this metric over EBITDA is that for the kind of companies in question, EBITDA alone will miss out a massive cost and thereby over-inflate earnings. EBITDAR is not used for most companies as although they may have some rent costs (office space, parking etc) it is usually quite a small portion of costs. For airline and shipping companies (or any other which rents most of its capital), rent is likely to be one of if not the highest costs.

 

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