What is ebitda and how is it calculated?
Posted: Thu Dec 05, 2024 8:28 am
EBITDA is a very important concept for companies, as it allows them to understand the profitability of the business and determine its productivity and efficiency. We explain what it is and how to calculate it in a practical and clear way.
What is EBITDA?
EBITDA, an acronym for "Earnings before interest, taxes, depreciation and amortization", is a profitability indicator. Its calculation makes it possible to identify how much the company generates financially, without taking into account taxes and other financial effects.
What is EBITDA for?
Using a tool like EBITDA indicates whether the company is making a profit fusion phone number data a loss. However, it must be accompanied by other indicators such as net profit, turnover growth, cost situation and debt. These are the aspects in which calculating EBITDA is an added value for companies:
Allows you to calculate the productivity of the business;
It opens space for an objective analysis of the business's gains and losses;
Helps with the viability of new projects or the company itself;
Allows comparisons of the company's history over time;
Allows comparison with other companies in the same market.
But not everything is advantageous, using this profitability indicator exclusively may not be ideal, as EBITDA:
Does not consider changes in working capital;
Does not show the real value of liquidity;
It does not take into account several variables, such as the company's debt.
How to Calculate EBITDA?
To calculate EBITDA, it is necessary to know the value of the operating profit, subtracting the cost of goods sold, operating expenses and financial expenses from the net revenue. Operating expenses include marketing costs, salaries and office rent, for example. Interest payments and financial discounts are examples of financial expenses.
What is EBITDA?
EBITDA, an acronym for "Earnings before interest, taxes, depreciation and amortization", is a profitability indicator. Its calculation makes it possible to identify how much the company generates financially, without taking into account taxes and other financial effects.
What is EBITDA for?
Using a tool like EBITDA indicates whether the company is making a profit fusion phone number data a loss. However, it must be accompanied by other indicators such as net profit, turnover growth, cost situation and debt. These are the aspects in which calculating EBITDA is an added value for companies:
Allows you to calculate the productivity of the business;
It opens space for an objective analysis of the business's gains and losses;
Helps with the viability of new projects or the company itself;
Allows comparisons of the company's history over time;
Allows comparison with other companies in the same market.
But not everything is advantageous, using this profitability indicator exclusively may not be ideal, as EBITDA:
Does not consider changes in working capital;
Does not show the real value of liquidity;
It does not take into account several variables, such as the company's debt.
How to Calculate EBITDA?
To calculate EBITDA, it is necessary to know the value of the operating profit, subtracting the cost of goods sold, operating expenses and financial expenses from the net revenue. Operating expenses include marketing costs, salaries and office rent, for example. Interest payments and financial discounts are examples of financial expenses.