Although lease have been capitalised in the balance sheet (and depreciated in the profit and loss statement) since IFRS 16, its expenses are often still adjusted back into EBITDA given they are deemed operational in nature.
He advocated for its use over traditional metrics like Earnings per share (EPS), arguing that EBITDA offered a more accurate reflection of financial performance for high-growth, capital-intensive businesses.
By focusing on EBITDA, he showcased a company's capacity to generate cash flow while effectively utilizing leveraged debt and reinvesting profits to minimize taxes—an approach that defined his investment philosophy.
These adjustments can include bad debt expenses, any legal settlements paid, costs for acquisitions, charitable contributions and salaries of the owner or family members.
[15] Earnings Before Interest, Depreciation, Amortization and Exploration (EBIDAX) is a non-GAAP metric that can be used to evaluate the financial strength or performance of oil, gas or mineral company.
Historically, OIBDA was created to exclude the impact of write-downs resulting from one-time charges, and to improve the optics for analysts comparing to previous period EBITDA.
An example is the case of Time Warner, who shifted to divisional OIBDA reporting subsequent to write downs and charges resulting from the company's merger into AOL.
On 13 May 2020, the Financial Times mentioned that German manufacturing group Schenck Process was the first European company to use the term in their quarterly reporting.
[17] The company had added back €5.4m of first-quarter 2020 profits that it said it would have made were it not for the hit caused by 'missing contribution margin and cost absorption reduced by direct financial state support received majorly in China so far'.