INCREASE OF EBITDA


The operational profit (EBITDA) is an important component for every business organization. The abbreviator means “Earnings Before Interests Taxes Depreciation & Amortization”.  This parameter is important for the business unit because the value (the worth) of every business company is calculated at a base N times the annual EBITDA. The coefficient N varies between 3 and 8 and depends on the region of the business activity (economic environment and potential for growth) but also on the  amount and the type of infrastructure the company owns. The value (worth) of a business company through the EBITDA parameter is calculated as follows:

-       Manufacturing: 5.5 to 8.5 times EBITDA

-       IT & High tech: 6 to 12 times EBITDA

-       Health-care services: 5 to 9 times EBITDA

-       Retail: 4.5 to 7.5 times EBITDA

-       Telecommunications: 4 to 8 times EBITDA

-       Public relations, advertising, media: 3 to 6.5 times EBITDA

-       Hotels & Restaurants: 4 to 8 times EBITDA

 

The size of EBITDA is increased by optimization of one or two from the following parameters:

1) Increase of Incomes (Sales)

and 

2) Decrease of  Operational costs (OPEX).

stock.jpg