Thread by @IshanTanna1

@zomato used Adjusted EBITDA word 22 times in Q3 FY23 results ?

Confused right?

Let's take a deep dive.

What is Adjusted EBITDA?

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#zomato #AdjustedEBITDA

To understand Adjusted EBITDA let's understand EBITDA first...

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a commonly used metric in financial reporting.

The concept behind EBITDA is to measure a company's earnings before accounting for certain expenses such as interest on loans, taxes owed, depreciation of assets, and amortization of intangible assets.

The purpose of using EBITDA is to get an understanding of the company's potential future earnings. It is particularly useful for acquirers as it helps them to determine the potential of a company despite its current losses.

However, EBITDA has limitations as it only measures earnings before certain expenses and not all expenses.

To overcome this limitation, a concept called "Adjusted EBITDA" was introduced, which includes additional expenses that are unique to different industries.

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial metric that measures a company's earnings, excluding certain expenses such as interest payments, taxes, depreciation, and amortization.

The purpose of using adjusted EBITDA is to provide a more accurate picture of a company's financial performance, as it eliminates the effects of non-operating expenses and one-time events that might distort the true picture of a company's financial situation.

Start-ups and new businesses often use EBITDA as a way of offsetting one-time costs, such as setting up a new company. However, it is important to be aware that some companies can use EBITDA and adjustments to hide losses.

This can sometimes lead to the inclusion of items that should not be included, and it is therefore important for investors to carefully read companies' reports and understand what adjustments are being made in the calculation of adjusted EBITDA.