What is EBITDA and why is it used?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization and is a commonly used indicator for the “true” operational profit of companies. A main advantage of the EBITDA indicator is that it allows a better ‘apples and apples’ comparison of different companies as it excludes distorting differences in accounting practices and tax regimes between countries and companies. EBITDA indicates a company’s gross cash generation capability and its fundamental ability to pay its costs of capital and finance future investments. As such, the Steel Earnings Barometer provides a comprehensive picture of the financial health of the steel industry including the effects of changes in sales prices, operating expenses and raw materials prices on industry profitability.
