The best way to explain seller financing in business, is to imagine buying a car from a friend, but you don’t have all the money to buy it. But, as your friend trusts you, and they need to sell their car now, they agree to let you pay a bit each week or month until you’ve paid for the car in full.
You can do seller financing in the UK, where the seller lends the money to the buyer to buy their business. Actually, it’s the business itself that finances the deal and seller finance is used in many business acquisitions in the UK, and is a legally accepted way to fund the purchase of businesses.
EBIT is earnings before interest and taxes. To calculate EBIT in simple terms, start with profit before tax, deduct interest income, and add-back interest expense. These amounts are easily found on a business’s profit and loss page, which is included in the financial statements.
EBIT is used to measure a business’s operational profits, or trading profits, and is calculated by adding-back interest paid and deducting interest income from profit before tax. These numbers can be found on the face of a profit and loss, which is included in a business’s financial statements.
EBITDA is earnings before interest, taxes, depreciation and amortisation. To calculate EBITDA in simple terms, start with profit before tax, deduct interest income, and add-back interest expense, depreciation and amortisation. All these amounts are easily found on a business’s financial statements.
EBITDA is earnings before interest, tax, depreciation and amortisation, and is often used to value small businesses. Some argue that EBITDA represents a better picture of profit from trade operations, but by adding back depreciation and amortisation, this distorts the profitability of the business.