Analyzing Financial statements

Income statement
Review trends in EBITDA, EBIT, EBT and Net Income and explain what is happening to the company. EBITDA includes operating earnings and other income, but it does not include foreign exchange gains or losses, minority interest, extraordinary income or interest income

EBITDA
Rough proxy for free cash flow Not generally shown in the income statement Compare EBIT To Net assets and Net capital Ratio of EBITDA to revenues should be shown for historic and projected periods EBITDA is related to un-levered cash flows while Net Income and EPS are after leverage NOPLAT = EBIT less adjusted taxes

Limitations of EBITDA
EBIT is more important than Depreciation and amortization EBITDA is a better measure for companies with long lived assets EBITDA ignores changes in working capital, does not consider required re-investment, says nothing about the quality of earnings.