Originally Posted by
Icarus2001
Great, their EBITDA figures are not too bad. What about after they have paid their bills? My earnings before tax are pretty good too but those dollars are useless in the real world as I cannot spend them.
EBITDA. Earnings BEFORE interest, tax, depreciation and amortisation.
Well obviously the corporate tax rate for the Australian entity is a flat 30%, however this is only applied after deducting the NON-CASH expenses of Depreciation and Amortisation, resulting in an effective lowering of the tax rate payable. Of course the wild card is the Interest component which is Interest Income - Interest Expense, so depending on their cash at bank vs cash loans/drawn credit facilities it could be a plus or minus. Remembering that operational leases such as for aircraft and equipment are categorised as direct expenses and the interest component is rarely separated, hence my distinction that it only relates Cash Loan facilities.
Therefore, after D and A and even accounting for some I, they probably paid next to no tax and got to keep most all of the cash actually!