The EBITA does not provide any information about the net income you can actually credit to your company at the end of the year. This key figure excludes items that have a significant influence on the operating success, but which do not provide any information on whether your business performed well or badly in the past year. A further advantage of this value is that it works well as a comparative value: Interest, i.e. capital income and capital costs as well as depreciation on intangible assets and taxes are disregarded, whereas depreciation on tangible assets is taken into account. This makes it possible to compare the operating success of different companies, not least across national borders.
According to the meaning of the term "amortisation," intangible assets are licenses, patents, software, etc. to which a concrete value can be attached. If they were created by the company itself, they can be included in the balance sheet if you wish, otherwise they are mandatory. If a specific operating lifespan can also be specified for such goods, they can be depreciated accordingly.
In addition, there are intangible goods that can contribute to the value of a company, but do not have a concrete quantifiable value themselves, such as trademarks, newspaper mastheads, publishing rights, and lists of customers, etc.
In addition to interest costs and income, EBITA also excludes other extraordinary and non-recurring costs, or income that is not attributable to the company's operating success. Values like these can also distort the picture and make it difficult to compare your company with others.
With regard to its concept, EBITA sits betweenEBIT and EBITDA: These two indicators also omit some items, and they are suitable in various ways for working out the success of a company. The EBIT merely does not include interest and taxes, while depreciation is taken into account. On the other hand, EBITDA also excludes depreciation of property, plant, and equipment.