Formula for calculating EBITDA

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EBITDA ( Earnings Before Interest, Taxes, Depreciation, and Amortization ) is a financial measure used to evaluate a company's operating profitability, excluding the effects of interest on loans, taxes, depreciation, and amortization.



EBITDA allows you to avoid the influence of non-operational factors on the assessment of the operational efficiency of a business. This indicator is widely used by investors, analysts and company executives when assessing the profitability and value of a business.

Benefits of using EBITDA:

Comparability - allows you to compare the profitability of different uae email list companies regardless of their financial structure and tax situation.
Evaluation of operational efficiency - allows you to assess how successfully a company generates profit from its core activities.
Business analysis - allows you to highlight the impact of factors such as financial costs and taxes on the overall profit of the company.
It is important to note that EBITDA does not take into account the cost of investment in equipment, which, although it does not directly affect operating profit, can have a significant impact on the long-term profitability of the company. Therefore, when using EBITDA in analysis, all aspects of the business should be considered.

The main difference between EBIT and EBITDA is that EBIT only excludes interest and taxes from operating profit, whereas EBITDA also excludes depreciation and amortization.

Both EBIT and EBITDA are designed to measure a company's operating profitability and can be useful when comparing companies in different industries or with different financial structures. However, because EBITDA does not take into account depreciation and amortization, it can create the illusion of higher profitability than it actually is. EBIT, on the other hand, takes into account taxes and interest, making it a more conservative measure that is closer to a company's true financial performance.