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Can you explain EBITDA (Earnings before Interest, Depreciation, Taxes and Amortization)?

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تم إضافة السؤال من قبل Siham Amer , Financial Analyst , Noor Al Hikmah Group
تاريخ النشر: 2019/04/07
Ashraf E. Mahmoud (PhD)
من قبل Ashraf E. Mahmoud (PhD) , University Lecturer, Freelancer Consultant and Trainer for Int'l Business & Banking TF. , FreeLancer

Thanks for invitation,

EBITDA, or earnings before interest, taxes, depreciation and amortization, is a measure of a company's overall financial performance and is used as an alternative to simple earnings or net income in some circumstances.

EBITDA, however, can be misleading because it strips out the cost of capital investments like property, plant, and equipment.

This metric also excludes expenses associated with debt by adding back interest expenses and taxes to earnings. Nonetheless, it is a more precise measure of corporate performance since it is able to show earnings before the influence of accounting and financial deductions.

Simply put, EBITDA is a measure of profitability. While there is no legal requirement for companies to disclose their EBITDA, according to the U.S.accounting principle generally accepted accounting principles (GAAP), it can be worked out and reported using information found in a company's financial statements

The earnings, tax, and interest figures are found on the income statement, while the depreciation and amortization figures are normally found in the notes to operating profit or on the cash flow statement. The usual shortcut to calculate EBITDA is to start with operating profit, also called earnings before interest and taxes (EBIT) and then add back depreciation and amortization.

 

Hamza Saeed
من قبل Hamza Saeed , Head , Abdul Latif Jameel Retail Co. Ltd. – TOYOTA

EBITDA are the earnings which an organization earned after deducting those expenses which are directly related to the core operation of the business, or we can say that those outgoing economic resources which are generating the cash or income to the business. We can summarize it in the form as below

Sales/Revenues

(COGS)

EBITDA

Sourabh Singhal
من قبل Sourabh Singhal , Senior Finance Manger , Seder Group Trading & contracting Co. Ltd

EBITDA is a measure of Company's operating performance. This figure represents what an entity earned before the deduction of taxes, depreciation, interest on loans and reduction for amortization, a paying of debts for over time. Many will use this number to represent how efficient a Company is in its operation in comparision to another similar business.

Mohammad shahidullah
من قبل Mohammad shahidullah , Human Resources Manager (HR Manager) , BSA GROUP OF COMPANIES (GARMENTS MANUFACTURER)

This is profit after deducting all direct and indirect expenditures from sales.

Rashid Khurshid
من قبل Rashid Khurshid , Assistant Manager Internal Audit , Masood Textile Mills Ltd

EBITDA is the profit after deduction of all expenses like direct cost and indirect cost and at the end deduction of taxes & depreciation

Kamran Khaliq
من قبل Kamran Khaliq , Staff Accountant , AKS TAX & BOOKKEEPING

EBITDA is earnings before interest, taxes, depreciation, and amortization. It measures the overall profitability of the company. 

To get net income from EBITDA, subtract depreciation/amortization, interest expense, and taxes from EBITDA.

EBITDA = EBIT + DEPRECIATION + AMORTIZATION

EBITDA MARGIN = EBITDA/TOTAL REVENUE

SANTOSH KUMAR
من قبل SANTOSH KUMAR , Finance and Account Manager , Hadeed Emirates Cont. Co. LLC

Logically it is gross profit.

Chick Leslie
من قبل Chick Leslie , Storekeeper , MODULAR GENERAL CONTRACTING LLC

EBITDA in simple terms is referred as the revenue after all major expenses of the company like production cost such as salaries, distribution cost such as transportation, administrative cost such as finance charges etc are been deducted from the Gross profit before taxes  and depreciation are being computed.

mostafa tujjar
من قبل mostafa tujjar , Finance and compliance officer , R&D

Hi,

EBITDA, it's a way to evaluate a company's performance without having to factor in financing decisions, accounting decisions or tax environments.

you calculate it in two ways:

1- EBITDA= Revenue - (COGS + G&A expenses)

2-EBITDA= Net Income + Interest expenses +Taxes+ Depreciation + Amortization 

 

hope that help you

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