- Original Poster
- #1
I know you have indicators like EBITDA which show you how much money the business generates before you deduct fixed costs like taxes, interest on payments, depreciation and amortisation, but with depreciation and amortisation, you pay the costs on those long-term tangible / intangible assets upfront, right? So even though you have accumulated depreciation and amortisation, it doesn't really give you a clear picture of how much the initial outlay was.
And then you have retained earnings, which accounts for more expenses than EBITDA adds back in, like employee benefits such as salaries and NI contributions, and dividend payments to shareholders.
You also have FCF / free cash flow, which shows you how much income you have remaining after deducting both capex and opex costs, so it's perhaps one or two steps behind retained earnings / profits.
I apologise if this sounds scatterbrained, but given the information I've posted above, hopefully it gives you some idea as to where my thinking is. For those examining the accounts, which indicators would they pay most attention towards?
And then you have retained earnings, which accounts for more expenses than EBITDA adds back in, like employee benefits such as salaries and NI contributions, and dividend payments to shareholders.
You also have FCF / free cash flow, which shows you how much income you have remaining after deducting both capex and opex costs, so it's perhaps one or two steps behind retained earnings / profits.
I apologise if this sounds scatterbrained, but given the information I've posted above, hopefully it gives you some idea as to where my thinking is. For those examining the accounts, which indicators would they pay most attention towards?
