The depreciation concept is a sinking fund to offset asset acquisition on a later date. i.e. to renew the asset after a period for continued business. So the business has to generate that income too. With regard to interest costs ; reasonable charge is also to be generated. the debt or equity it comes at a cost.
The EBITDA reflects operating profits, and net profit is to be derived.
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Thinking Deeper About EV/EBITDA – Graham, Buffett, And Beyond
The depreciation concept is a sinking fund to offset asset acquisition on a later date. i.e. to renew the asset after a period for continued business. So the business has to generate that income too. With regard to interest costs ; reasonable charge is also to be generated. the debt or equity it comes at a cost.
The EBITDA reflects operating profits, and net profit is to be derived.