Explained below How is EBITDA Calculated
To calculate EBITDA, you need to start with the company’s net income. Then, you add back the following expenses:
- Interest
- Taxes
- Depreciation
- Amortization
Here’s an example:
Net income: $100,000
Interest: $10,000
Taxes: $20,000
Depreciation: $5,000
Amortization: $2,000
EBITDA: $105,000
In this example, the company’s EBITDA is $105,000. This means that the company generated $105,000 in operating income before taking into account interest, taxes, depreciation, and amortization.
it is Important to know How is EBITDA Calculated, EBITDA is a useful tool for investors and analysts because it provides a more accurate picture of a company’s profitability than net income. This is because net income can be affected by factors such as financing choices and tax rates, which can distort the true picture of a company’s financial performance
