For a company or industry with relatively low capital expenditures required to maintain its operations, EBITDA can be a good proxy forcash flow. However, for companies in capital-intensive industries such as oil and gas, mining, and infrastructure, EBITDA is a near meaningless metric. The extensi...
Capital-intensive industries and growing industries tend to retain more of their earnings than other industries because they require more asset investment just to operate. Also, because retained capital represents the sum of profits less dividends since inception, older companies may report significantly ...
the EV/EBIT ratio can’t be used in isolation. Analysts and investors should use the ratio alongside others to get a full picture of a company’s financial state and actual worth, whether the market’s interpretation of value is accurate, and how likely the market...
Industry-specific factors: EBIT doesn't consider industry-specific factors such as regulatory changes, technological advances, or market trends, which can affect profitability. For instance, capital-intensive industries like manufacturing have higher depreciation expenses, which can reduce EBIT even if oper...
A high capital intensity ratio may be due to lower utilization of the company's assets or it may be because the company's business is more capital intensive and less labor intensive (for example, because it is automated). However, for companies in the same industry and following similar ...
Cash balance from investing activities may prove an important source to offset negative cash flows from operations. Capital-intensive industries require massive investments in fixed assets. If an entity continuously gives negative net cash flows from investing activities due to the purchase of fixed asse...
Example of Bridge Financing Bridge financing is quite common since there are always struggling companies. It can also be more prevalent in capital-intensive sectors. For example, the mining sector is filled with small players who often use bridge financing in order to develop a mine or to cover...
Innovation is the foundation and core of competition for the development of knowledge-intensive services, with the exchange and collaboration of high-level human capital playing a key role in this process. In recent years, China's universities have continued to expand their enrollment, and the scal...
A capital-intensive industry will have more of this ratio since they require huge capital. To suffice their capital requirement, they go for debt. While industries requiring lower capital will usually have a lower debt ratio. For example, a steel manufacturing industry is more capital intensive an...
Pharmaceutical industry is one of the fastest growing industries in the global economy. In addition, it is a capital intensive industry because it depends on the results of long-term and expensive R&D projects. Croatia has a century long tradition in drug production, ...