Learn the difference between EBIT and EBIAT and how these two calculations forecast company performance. Calculate forecased EBIT and EBIAT and analyze trends.
- [Instructor] I want to tackle our equation…one step at a time to determine our free cash flow.…Free cash flows are normally calculated…so they can be compared to some…other alternative use of funds.…In order to put the alternatives on a comparable basis,…they need to be financed on a comparable basis,…and the easiest way to do this is to assume…that they're financed entirely by equity.…To do this, we should strip away the impact of interest…by calculating an amount called EBIAT:…earnings before interest after taxes.…
But, to calculate EBIAT, we first need to calculate…earnings before interest and taxes, or EBIT.…Here's the equation again.…We're going to solve for the first part of it.…As you can see, I've nicely put together a balance sheet…and income statement into one spreadsheet.…This is the exercise file labeled 04_02_Begin.…So what I'm going to do is I'm going to create…two more labels on A38 and A39…labeled EBIT and EBIAT.…
And I'm going to bold both of them so that they're easy to see.…Remember, EBIT doesn't include taxes and interest.…
- Explain the four different types of financial statements.
- Distinguish between the types of moving averages.
- Determine a seasonal adjusted trend.
- Break down pro-forma financial statements.
- Identify cash flows, and what increased liabilities and decreased earnings generally indicate.
- Tell what a regression is.
- Outline the naive approach.
Skill Level Intermediate
Finance Foundations: Business Valuationwith Jim Stice1h 39m Intermediate
1. Finance Basics
2. Simple Financial Forecasting
3. Pro Forma Financial Statements
4. Projecting Cash Flows
5. Introduction to Regression Analysis
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