As you know, the word “EBIT” is a kind of abbreviation derived from “Earning Before Interest & Tax”, which is almost equal to the “Operating Profit”.
And, the word “EBITDA” is also abbreviation from “Earning Before Interest, Tax, Depreciation & Amortization”, which is similar with “Operating Profit excluding Depreciation & Amortization” or “Free cash flow”.
We, Japan Agribio group companies has management policy that performance review and progress control shall be executed by EBIT and EBITDA.
I have to admit that it is quite simple rule.
As you know, EBIT shows “How much you have earned from your core operation” and “EBITDA” indicates “How much you are generating cash”, respectively.
It goes without saying that there exists so many other management index like “Solvency ratio”, “Debtors position” and “Cash position” etc, however, I am saying that major 2 index are “EBIT” and “EBITDA”.
On the other hand, since Japan Agribio is non-Japanese company to be consolidated to Dutch mother company, we have to use the figures in accordance with Dutch GAAP
In this connection, we have to be much more conservative in some area like below described;
Provision for employees retirement fee, bonus payment and paid leave
As conclusion, such “EBIT” and “EBITDA” calculated under Dutch GAAP shall have high transparency and global acceptance and are useful in case of computing company’s value much more accurate.
Then the question might be what is the current EBIT and EBITDA of Agribio group companies worldwide.
I normally reply in the following manner;
Agribio global consolidated sales 85 million Euro
Agribio global consolidated EBITDA 15 million Euro
With Best Regards,