EBITDA definition clarified for Higher Education sector

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17 Nov, 2013

A note clarifying how Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) should be calculated by entities in the Higher Education (HE) Sector has been issued by members of the British Universities Finance Directors Group (BUFDG).

The note explains that a standard definition is required in the higher education sector due to "unique features which are different from those faced in the corporate sector".

The reason for the clarification is because "the previous definition (May 2012) created some confusion, due to the fact that its starting point was ‘historic cost’ surplus but it ignored some historic cost adjustments such as release of revaluation reserves".  The revised definition starts with operating surplus for the year reported on the face of the Income and Expenditure account and will allow EBITDA to be reported on a consistent basis on the new ASSUR return, part of the new Margin for Institutional Sustainability metric.

BUDFG has commented that the definition of EBITDA will again be reviewed in light of FRS 102 and the new further and higher education SORP.

Click here to access this note (link to BUFDG website)

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