The importance of EBIT- EBITDA disclosure in annual reports: A comparison from Turkey

Financial statement analysis is the process of reviewing and analyzing a company's financial statements to make better economic decisions. When analyzing company’s financial performance and calculating some ratios it is better to use EBIT (E arnings Before Interest and Taxes ) information rather than net income . This is a measure of a firm's profit that includes all expenses except interest and income tax expenses. It is the difference between operating revenues and operating expenses. This is an important factor contributing to the widespread use of EBIT is the way in which it nulls the effects of the different capital structures and tax rates used by different companies. By excluding both taxes and interest expenses, the figure honest in on the company's ability to profit and thus makes for easier cross-company comparisons. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is also popular among highly leveraged and capital-intensive firms that require lots of depreciation calculations, such as utilities or telecommunications companies. This is because these firms have high depreciation rates and large interest payments on debt, often leaving them with negative earnings. In this study evolution of EBIT and EBITDA disclosure in the financial data part of the annual reports of companies listed in BIST 50 (Borsa Istanbul) is investigated by comparing the year 2010 and year 2015 information.