EBITDA - indicator of economic analysis, which reflects the Company's receipt of income before income tax, depreciation and interest expense on loans.
The economic meaning of the concept of EBITDA
In some cases, EBITDA is used? Primordial its purpose - the analysis of the attractiveness of transactions for acquisitions with borrowed money. Today it is used for wider purposes.
Thus, EBITDA allows us to estimate howprofit is the main activity of the company, as well as its effectiveness regardless of the size of credit debt and the tax burden. Thanks EBITDA depreciation method is irrelevant in determining the company's profits.
The indicator is used forcomparative analysis in relation to competitors, to assess the value of the business before the sale. Investors evaluate him on the basis of return on investments. The indicator used in the analysis of the operating results of the company, as it does not include non-cash items of costs.
It is worth noting that many of the economicAnalysts have criticized EBITDA. Since it does not include the performance of the company capital costs (depreciation). It turns out, the company can spend huge sums on new equipment and EBITDA remains unchanged. Critics say more realistically reflect the financial condition of the company's performance "profit" and "operating stream of payments."
How to calculate EBITDA
EBITDA is calculated on the basis ofCompany statements in accordance with international IFRS and GAAP standards. However, EBITDA is not a part of these standards, it is calculated for the purposes indicated by the following formula:
(Net profit + costs of payment of income tax - Recovery of income taxes + interest paid - interest received) = EBIT + (depreciation - revaluation of assets) = EBITDA.
On the basis of statements by Russian standardsstatements (RAS) to accurately calculate the index is problematic due to the lack of necessary information. The approximate calculation can be made taking into account the following indicators EBITDA = Profit from sales (p. 50 F.№ 2) + Depreciation (form number 5). This formula has some error.
In addition to EBITDA, for the analysis of the debt burdencompanies often use its derived figure Debt / EBITDA ratio. It reflects the ratio of financial results and the company's debt burden. The coefficient is a testament to the company's ability to fully repay the full amount of liabilities and reflects the level of solvency. If it is high enough, it is a dangerous signal about the problems with debt load. Often Debt / EBITDA ratio is used by analysts to assess publicly traded companies.
In addition to EBITDA is often used andintermediate indicators: EBIT (earnings before interest on loans and taxes) - EBT (earnings before taxes) - OIBDA (operating income before depreciation) - NOPLAT (net operating profit minus taxes).