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Eastman Chemical Co (NYSE:EMN)
EBITDA
$2,257 Mil (TTM As of Mar. 2014)

Eastman Chemical Co's EBITDA for the three months ended in Mar. 2014 was $468 Mil. Its EBITDA for the trailing twelve months (TTM) ended in Mar. 2014 was $2,257 Mil.

During the past 12 months, the average EBITDA Growth Rate of Eastman Chemical Co was 71.60% per year. During the past 3 years, the average EBITDA Growth Rate was 31.90% per year. During the past 5 years, the average EBITDA Growth Rate was 32.40% per year. During the past 10 years, the average EBITDA Growth Rate was 9.30% per year.

During the past 13 years, the highest 3-Year average EBITDA Growth Rate of Eastman Chemical Co was 109.00% per year. The lowest was -52.30% per year. And the median was 4.55% per year.

Eastman Chemical Co's EBITDA per Share for the three months ended in Mar. 2014 was $3.06. Its EBITDA per share for the trailing twelve months (TTM) ended in Mar. 2014 was $14.51.

During the past 12 months, the average EBITDA per Share Growth Rate of Eastman Chemical Co was 67.40% per year. During the past 3 years, the average EBITDA per Share Growth Rate was 28.30% per year. During the past 5 years, the average EBITDA per Share Growth Rate was 30.30% per year. During the past 10 years, the average EBITDA per Share Growth Rate was 10.60% per year.

During the past 13 years, the highest 3-Year average EBITDA per Share Growth Rate of Eastman Chemical Co was 104.00% per year. The lowest was -52.40% per year. And the median was 7.65% per year.


Definition

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is what the company earns before it expenses interest, taxes, depreciation and amortization.

Eastman Chemical Co's EBITDA for the fiscal year that ended in Dec. 2013 is calculated as

EBITDA(A: Dec. 2013 )
=EBIT+Depreciation, Depletion and Amortization
=1859+433
=2,292

Eastman Chemical Co's EBITDA for the quarter that ended in Mar. 2014 is calculated as

EBITDA(Q: Mar. 2014 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense-Research & Development-Others
=2305-1710-168-53--94
=468

EBITDA(Q: Mar. 2014 )
=EBIT+Depreciation, Depletion and Amortization
=361+107
=468

Eastman Chemical Co Earnings Before Depreciation and Amortization for the trailing twelve months (TTM) ended in Mar. 2014 was 537 (Jun. 2013 ) + 588 (Sep. 2013 ) + 664 (Dec. 2013 ) + 468 (Mar. 2014 ) = $2,257 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Sometimes companies may have already deducted Depreciation and Amortization from Gross Profit. In this case Depreciation and Amortization needs to be added back when calculating EBITDA.


Explanation

EBITDA is a cash flow measure that ignores changes in working capital. EBITDA minus Depreciation, and Amortization (DA) equals Operating Income. Operating Income is profit before interest and taxes. Of course, Interest and taxes need to be paid.

While depreciation and amortization expenses do not need to be paid in cash, assets - especially tangible assets - do need to be replaced over time. EBITDA is not a measure of profit in any sense. EBITDA is a measure of cash generation by a business where the uses of that cash may be more or less discretionary depending on the nature of the business.

The EBITDA of a TV station is largely discretionary. Owners may use much of the EBITDA generated by a TV station as they see fit. The EBITDA of a railroad is largely non-discretionary. Owners must use much of the EBITDA generated by a railroad to replace the physical assets of the railroad or the business will literally fall apart over time.

EBITDA can be thought of as the cash a business generates that is available to:

• Add more inventory
• Add more receivables
• Replace property, plant, and equipment
• Add more property, plant, and equipment
• Pay interest
• Pay taxes
• And finally: pay owners

EBITDA is widely used in financial analysis because Depreciation and Amortization are not present day cash expenses.. Depreciation and amortization are the spreading out of the costs of assets over the time in which those assets provide benefits. Today’s depreciation and amortization expenses relate to assets bought in the past. The assets being expensed may or may not need to be replaced in the future. And the cost to replace the assets may be more or less than it was in the past. For this reason, the depreciation and amortization expenses a company records in the present year may have no relationship to the actual cash costs needed to maintain its assets in future years.

A company’s depreciation expense depends on both its expectations about the assets it owns and its choice of accounting methods. Two companies owning identical assets may have different depreciation expenses because they have different expectations about the useful lives of those assets and because they make different accounting choices.

Analysts use EBITDA to remove this element of personal choice from a company’s accounting statements. The use of EBITDA is an attempt to make the results of different companies more comparable and uniform.


Be Aware

Although depreciation is not a cash cost it is a real business cost because the company has to pay for the fixed assets when they purchase them. Both Warren Buffett and Charlie Munger hate the idea of EDITDA because in this calculation, depreciation is not counted as an expense.

EBITDA over Revenue is a good metric for comparing the operating efficiencies between companies because EBITDA is less vulnerable to companies’ accounting choices. For this reason, EBITDA is used in ranking the Predictability of Companies. Also price/EBITDA is sometimes used in valuations.


Related Terms

Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense, Research & Development, Gross Profit, Depreciation, Depletion and Amortization, Operating Income


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Eastman Chemical Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
EBIT 1798766965734993327199577921,859
DDA 322304308327267274280273360433
EBITDA 5011,1801,0049007666069991,2301,1522,292

Eastman Chemical Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
EBIT 264316271-66393429480557361436
DDA 6971112108110108108107107110
EBITDA 33338738342503537588664468546
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