Earnings before interest, taxation, deprecation and amortisation. Interest is classed as other income and taxation is kinda self-explanatory.
Depreciation is spreading the cost of a fixed asset over the course of its useful life. So let’s say you spend $40,000 on a machine that you expect to keep for 20 years, and scrap for $1,000 at the end of its expected life. You depreciate it on the straight-line basis (meaning it goes down by a fixed amount each financial year, or depreciate it by $1,950 each year. Straight-line isn’t the only form of depreciation. Cars for example go down on a reducing balance basis, meaning their value goes down by a lot more during the early years of their lifespan.
Amortisation is like depreciation, but for long term loans and intangible assets (things like customer lists, patents, etc.)
Sorry, I don’t work in economics so I don’t follow this (but it looks like a great analysis for someone who doesn’t understand it!).
Do all these things mean Reddit IPO is likely to tank (though one never knows)?
I’d like Spez to pay for all he’s done to 3rd party apps and driving mods (and us users) away, but in the end I’m afraid it’s only going to be regular employees to feel the pinch and Spez just cashing out…
Also, Reddit has a ton of users and some other article these days said they’re going to sell everything to AI services that are going to train themselves on Reddit for a lot of dollars. Would this be enough to keep them afloat?
If i’m not mistaken (not an accountant but did do the accounts of a tiny company at one point) Interest, Depreciation and Amortization go into the calculation of gross (i.e. before tax) profits, unlike with EBITDA
EBITDA is used moreso in internal quarterly and monthly management accounts, which don’t follow the exact same structure as an annual report which companies have to publish annually by law and follow GAAP and IFRS guidelinss when preparing.
I don’t work in financial reporting, and I have no clue what even EBITDA is…
But even me, I come to the same conclusion!^^
Earnings before interest, taxation, deprecation and amortisation. Interest is classed as other income and taxation is kinda self-explanatory.
Depreciation is spreading the cost of a fixed asset over the course of its useful life. So let’s say you spend $40,000 on a machine that you expect to keep for 20 years, and scrap for $1,000 at the end of its expected life. You depreciate it on the straight-line basis (meaning it goes down by a fixed amount each financial year, or depreciate it by $1,950 each year. Straight-line isn’t the only form of depreciation. Cars for example go down on a reducing balance basis, meaning their value goes down by a lot more during the early years of their lifespan.
Amortisation is like depreciation, but for long term loans and intangible assets (things like customer lists, patents, etc.)
Thank you very much for the great explanation, I learned a lot.
Sorry, I don’t work in economics so I don’t follow this (but it looks like a great analysis for someone who doesn’t understand it!).
Do all these things mean Reddit IPO is likely to tank (though one never knows)?
I’d like Spez to pay for all he’s done to 3rd party apps and driving mods (and us users) away, but in the end I’m afraid it’s only going to be regular employees to feel the pinch and Spez just cashing out…
Also, Reddit has a ton of users and some other article these days said they’re going to sell everything to AI services that are going to train themselves on Reddit for a lot of dollars. Would this be enough to keep them afloat?
I’m dumb, how is this different from gross profits?
If i’m not mistaken (not an accountant but did do the accounts of a tiny company at one point) Interest, Depreciation and Amortization go into the calculation of gross (i.e. before tax) profits, unlike with EBITDA
EBITDA is used moreso in internal quarterly and monthly management accounts, which don’t follow the exact same structure as an annual report which companies have to publish annually by law and follow GAAP and IFRS guidelinss when preparing.