GMC Blog
What is EBITDA and why is it used?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Often, it is a key metric used in valuing a company. Many people use EBITDA as a proxy for cash flow available to pay investors, both debt and equity. EBITDA is a variation of what many refer to as operating income or Earnings Before Interest and Taxes (EBIT).
Business Valuation: The big 3 approaches
It is said that business valuation is both art and science. The art part comes from the valuators experience and professional judgement. The science comes from the approaches and methods used in calculating the value. Today we want to focus on the science part.
There are three (3) main approaches to valuations: Asset, Income, and Market. Under these three (3) approaches, there are various methods. Let us look at each approach in more detail.