NVI Technical College Information

Definitions

Amortization

EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization

Amortization is the paying off of debt with a fixed repayment schedule in regular

EBITDA stands for earnings before interest, taxes, depreciation and amortization.

installments over a period of time for example with a mortgage or a car loan. It also

EBITDA is one indicator of a company's financial performance and is used as a proxy

refers to the spreading out of capital expenses for intangible assets over a specific

for the earning potential of a business, although doing so has its drawbacks. Further,

period of time (usually over the asset's useful life) for accounting and tax purposes.

EBITDA strips out the cost of debt capital and its tax effects by adding back interest

and taxes to earnings.

Interest

Interest is the charge for the privilege of borrowing money, typically expressed as

Operating Profit

annual percentage rate. Interest can also refer to the amount of ownership a

stockholder has in a company, usually expressed as a percentage.

Operating profit is the profit earned from a firm's normal core business operations.

A

This value does not include any profit earned from the firm's investments, such as

Residual Land Value

earnings from firms in which the company has partial interest, and the before the

Land residual technique. in appraisal, a method of estimating the value of land when

deductions of applicable interest and taxes owed. Operating profit is calculated using

given the Net Operating Income (NOI) and value of improvements. Used for

the following formula: Operating Profit = Operating Revenue - COGS - Operating

feasibility analysis and highest and best use. (C. Darlow. Valuation and Development

Expenses - Depreciation and Amortization

Appraisal (London: 1982), pp. 1 – 28. (Residual Method of Valuation).

Depreciation

NAICSCode

Depreciation is an accounting method of allocating the cost of a tangible asset over

NAICS Code 611519 – Other Technical and Trade Schools

its useful life. Businesses depreciate long-term assets for both tax and accounting

Definition of NAICS Code 611519: This U.S. industry comprises establishments

purposes. For tax purposes, businesses can deduct the cost of the tangible assets

primarily engaged in offering job or career vocational or technical courses (except

cosmetology and barber training, aviation and flight training, and apprenticeship

they purchase as business expenses; however, businesses must depreciate these

training).

assets in accordance with IRS rules about how and when the deduction may be taken.

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