EBITDAR
What is EBITDAR, and why do lenders use it for retailers?
ONE OF 180 TERMS · FREE · NO SIGNUP
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
EBITDAR is earnings before interest, tax, depreciation, amortisation and rent — EBITDA with the rent added back. It puts a business that leases its premises on the same footing as one that owns them and borrows, so that leverage and cover can be read with the leases treated as the borrowing they are. Lenders use it most for retailers, hospitality and other businesses whose largest fixed commitment is rent: fixed charge cover divides it by rent plus interest plus scheduled principal, and catches the business whose debt looks modest because its obligations are leases rather than loans.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
- Cash conversion cycle
- Quality of earnings
- Debtor days
- Debt service cover ratio (DSCR)
- Interest cover ratio
- Debt to EBITDA (leverage)
- Dividend payout ratio
- Debt per kgMS
- Fixed charge cover ratio (FCCR)
- Global cash flow
- Adjusted EBITDA
- Creditor days (DPO)
- Inventory days (DIO)
- Maintenance capex
- Gearing
- Tangible net worth
- Downside case
- Breakeven milk price
- Debt-like items
- Operating leverage
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