What profit measure should I use?
However could it be that lenders are misinterpreting the profit calculations? The shift in profit measures from EBT (Earnings Before Tax), EBIT (Earnings Before Interest & Tax) and EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation) have meant that the basis for earnings has increased. Could it be that the increase in the profit measure has meant that lenders continue to use the same multiple, while simultaneously providing more finance??
PS to all the bankers I deal with – only joking.
Date: 30th April, 2007
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