EBIT, EBITD, and EBITDA

I'm reading my finance textbook and I'm on the section that deals with financial ratios like the current ratio, the quick or acid test ratio, the times interest earned ratio, and the cash coverage ratio. I have to admit that I didn't learn this in college or medical school, so this is fascinating information.

Like the language of medicine, the language of business is full of funny acronyms. One of those acronyms is TIE = Times Interest Earned. The TIE ratio is measured by taking the EBIT/interest. Now, let's review EBIT:

EBIT (ebbit) = Earnings Before Interest and Taxes
EBITD (ebbit-dee) = Earnings Before Interest and Taxes and Depreciation
EBITDA (ebbit-dah) = Earnings Before Interest and Taxes and Depreciation and Amortization

Amused? If you want to speak with business executives about financial issues, you need to get familiar with the language.



I am currently a business school student in the Pharmaceutical and Healthcare Executive MBA program at Saint Joseph's University Erivan K. Haub School of Business in Philadelphia, PA. The Nationally-ranked and AACSB-accredited Haub School of Business, centrally located in the mid-Atlantic pharmaceutical and healthcare corridor, is able to bring together industry experts and a world-class faculty for a unique industry-focused, immersive executive program.

You can read about my business school experience by reading all the blog posts tagged "Business School Blog."