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What does EBITDA mean?

EBITDA stands for earnings before interest, taxes, depreciation and amortisation. It is used to analyse and compare profitability between companies.

Print Edition: May 1, 2008

I have a couple of questions regarding the story on real estate (Real Estate 2008, 3 April). What is the full form of NCR? Secondly, are the figures in the graphic “Demand & Supply” for each year or for the period of 2007-15? It would have been interesting if you had also explored the home improvement industry in this story.

—Gopal Sehjpal, Mumbai

NCR stands for National Capital Region and includes Delhi and suburbs like Gurgaon, Noida, Faridabad and Ghaziabad. The graphic in the article has two parts—the first part indicates the supply for 2008 and 2009-10 in million sq ft; the second part is the demand for housing units in top 10 cities for the period of 2007-15. We have done a comprehensive story on home improvement called “Reinvest in your House” in issue dated 29 November 2007. You can read this story in our website.

The rise in prices of essential commodities is the result of wrong economic policies of the government (What’s your Inflation, 17 April). Retailers also contribute to inflation by arbitrarily increasing prices for higher profit margins. A good way to check this is through government control of prices in these retail outlets.

—Mahesh Kumar, Delhi

There are many causes of price rise. The government can check it through fiscal policies like slashing duties and monetary policies like raising bank rates. Clearing the supply chain bottlenecks will also help significantly. But retail shops are private enterprises and the government should not intervene to decide their prices.

I have recently renovated my apartment and was looking for a name plate. The latest profile in My Idea (Signs of Money, 17 April) was timely help. It would be great if you could send me the contact details of the entrepreneur or information about the outlets through which they sell nameplates.

—Jagdish Shethia, e-mail

We will send the contact details to you personally through e-mail.

The story on model portfolios (Staying the Course During Slowdown, 3 April) used the term EBITDA to analyse two stocks. What does it mean?

—T.N. Jaikumar, e-mail

EBITDA stands for earnings before interest, taxes, depreciation and amortisation. It is used to analyse and compare profitability between companies. There is a great degree of flexibility in what may be included in the calculation of EBITDA. This is why companies may change the items included in it’s computation. While this is a good tool to measure profitability, EBITDA does not represent cash earnings of the company.

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