EBITDA is an indicator of economic analysis that reflects the company's profit before taxes, depreciation and interest payments on loans.
The economic meaning of the concept of EBITDA
In what cases does EBITDA apply? Its original purpose is to analyze the attractiveness of acquisitions for borrowed funds. Today it is used for broader purposes.
So, EBITDA allows to estimate how muchProfitable is the main activity of the company, as well as its effectiveness regardless of the size of credit debt and tax burden. Thanks to EBITDA, the depreciation method does not matter when determining the company's profit.
The indicator is used toComparative analysis with respect to competitors, to assess the value of the business before selling. Investors on the basis of it evaluate the profitability of investments. The indicator is used in the analysis of the company's operating results, since it does not contain non-monetary items.
It is worth noting that many economicAnalysts criticize EBITDA. Since it does not include the company's capital expenditures (depreciation). It turns out that the company can spend huge sums on new equipment, and EBITDA will remain unchanged. In the opinion of critics, the financial state of the company reflects the "profit" and "operational flow of payments" indicators more realistically.
How to calculate EBITDA
The EBITDA is calculated on the basis ofThe company's reporting in accordance with international standards of IFRS and GAAP. But EBITDA is not part of these standards, it is calculated for the indicated purposes by the following formula:
(Net profit + income tax expenses - refunded profit tax + interest paid - interest received) = EBIT + (depreciation charge - revaluation of assets) = EBITDA.
Based on reporting under Russian standardsReporting (RAS) accurately calculate the indicator is problematic due to lack of necessary information. An approximate calculation can be made by taking into account the following indicators EBITDA = Profit from sales (page 50, FF No. 2) + Depreciation charges (Form No. 5). This formula has some error.
In addition to EBITDA, for the analysis of debt loadThe company often uses its derivative ratio Debt / EBITDA ratio. It reflects the balance of financial results and the company's debt load. The coefficient serves as evidence of the company's ability to fully repay the full amount of liabilities and reflects the level of its solvency. If it is high enough, it serves as a dangerous signal about problems with debt load. Often, the Debt / EBITDA ratio is used by analysts to assess the traded companies.
Along with EBITDA,Interim indicators: EBIT (profit before interest on loans and taxes) - EBT (profit before tax) - OIBDA (operating profit before depreciation) - NOPLAT (net operating profit minus taxes).