Which of the following statements is not correct?
A) EBITDA is looked at as a measure of the cash flow generated by operations.
B) EBITDA measures the wealth created by the enterprise from its operations,independently of its financial income and expenses,charges for depreciation and amortization,and other adjustments such as provisions for doubtful accounts.
C) EBITDA is also called operating profit.
D) EBITDA helps in evaluating the firm's management's short-term ability to create wealth since it is not affected by long-term strategic decisions regarding financing and capital investment policies.

Question

Quizplus · Accepted Answer

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is not synonymous with operating profit, as operating profit (or operating income) typically includes the effects of depreciation and amortization. EBITDA is used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions.

Which of the Following Statements Is Not Correct