Table:
| USDm | 2019 | 2018 | 2017 |
| --- | --- | --- | --- |
| Reconciliation to net profit/(loss) |  |  |  |
| Net profit/(loss) for the year | 166.0 | -34.8 | 2.4 |
| Tax | 0.8 | 1.6 | 0.8 |
| Financial expenses | 41.9 | 39.3 | 40.6 |
| Financial income | -2.8 | -3.3 | -4.3 |
| Depreciation | 110.1 | 114.5 | 114.5 |
| Impairment (reversal)/losses on tangible assets | -114.0 | 3.2 | 3.6 |
| EBITDA | 202.0 | 120.5 | 157.6 |
Paragraphs:
EBITDA: TORM defines EBITDA as earnings before financial income and expenses, depreciation, impairment, amortization and taxes. The computation of EBITDA refers to financial income and expenses which the Company deems to be equivalent to “interest” for purposes of presenting EBITDA. Financial expenses consist of interest on borrowings, losses on foreign exchange transactions and bank charges. Financial income consists of interest income and gains on foreign exchange transactions.
EBITDA is used as a supplemental financial measure by Management and external users of financial statements, such as lenders, to assess TORM's operating performance as well as compliance with the financial covenants and restrictions contained in the Company's financing agreements. TORM believes that EBITDA assists Management and investors by increasing comparability of the Company's performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects of interest, depreciation, impairment, amortization and taxes. These are items that could be affected by various changing financing methods and capital structure and which may significantly affect profit/(loss) between periods. Including EBITDA as a measure benefits investors in selecting between investment alternatives.
EBITDA excludes some, but not all, items that affect profit/(loss), and these measures may vary among other companies and not be directly comparable. The following table reconciles EBITDA to net profit/ (loss), the most directly comparable IFRS financial measure, for the periods presented:
Question:
What purpose is the EBITDA used for by Management and external users of financial statements, such as lenders?
Answer: EBITDA is used as a supplemental financial measure by Management and external users of financial statements, such as lenders, to assess TORM's operating performance as well as compliance with the financial covenants and restrictions contained in the Company's financing agreements.