What is EBITDA
EBITDA is Earnings Before Interest Tax Depreciation & Amortisation. It is one of the very popular parameters to know about the performance of a company.
It can be used to compare the profitability of two or more companies. We can use this to determine which company is profitable and which is in loss. This information we can get from P&L statement.
Calculation
Ebitda can be calculated using below formula :
EBITDA = Operating Profit + Depreciation Expense + Amortization Expense
Or
EBITDA = Net Profit + Interest + Taxes + Depreciation Expense + Amortization Expense
It gives a good idea about the financial performance of a company and portrait of how much cash a young or restructured company may generate before paying its debts