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EBIT = Operating Revenue – Operating Expenses + Other Revenue
EBITDA is an acronym for
Earnings Before Interest, Taxes, Depreciation and
Amortization. EBITDA is equal to the Net Income (Loss), displayed on
the Profit & Loss Statement. Generally, EBITDA is presented on an
annual basis, using the Fiscal Year End Profit & Loss Statement.
Recast EBITDA = EBITDA +/- the following items:
- Add to EBITDA executive & family members salaries, bonuses, benefits, luxury cars & extraordinary owner benefits, subtracting an amount equal to fair market salary & benefit package for replacement executive(s).
- Add to EBITDA rents paid by the business to the owner for building(s) & space; subtracting a fair market replacement amount for business rental expenses.
- Add to EBITDA consulting fees paid to owners, family members & friends of the owners.
- Add to EBITDA leases paid to owner for equipment, property & other items financed by the owner, subtracting a fair market replacement amount.
- Add to EBITDA loan payments & interest paid to owner(s).
- Add to EBITDA expenses incurred by the business that benefit the owner but do not substantially benefit the business.
- Add to EBITDA any capital expenditures within the past year, R&D and software development cost incurred by the business.
- Add to EBITDA any discretionary travel, lodging & entertainment that does not directly benefit the business.
- Add to EBITDA life & health insurance premiums paid by the business that benefit the owners and family above the business.
- Add to EBITDA any funding provided by the business in support of outside, external ventures or property for which financial benefits flow to the owner.
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“When it comes to acquisitions, Nelson Consulting is my business intermediary of choice. They perform the research, approach, qualification, negotiations and help close the deal. I focus on managing my business.”
-Kevin Mason, INVEST Financial Corporation
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