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EBITDA

EBITDA is earnings before interest, tax, depreciation and amortisation; it measures the cash-like profit generated by core operations. EBITDA shows how much a company earns from operations before its financing structure, tax regime and the accounting effect of past investment (depreciation) are taken into account.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Frequently asked questions

Key points

  • Analysts use it to compare companies and to gauge debt-servicing capacity.
  • EBITDA margin (EBITDA / Sales) reveals operating efficiency; a rising margin indicates pricing power or cost control, a falling margin signals competitive pressure.
  • EBITDA is not cash flow; it ignores working capital and capital expenditure.

Formula / calculation

EBITDA = Operating profit + Depreciation and amortisation. Yatırımcı.AI computes quarterly and annualised EBITDA from the income statement and cash flow statement lines of KAP financial reports.

Interpretation

EBITDA margin (EBITDA / Sales) reveals operating efficiency; a rising margin indicates pricing power or cost control, a falling margin signals competitive pressure. It is the denominator of EV/EBITDA and net debt/EBITDA.

Pitfalls

EBITDA is not cash flow; it ignores working capital and capital expenditure. Companies with heavy depreciation can look far better on EBITDA than on net profit. EBITDA is not computed for banks. Evaluate it alongside operating profit and the cash flow statement.

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Frequently asked questions

EBITDA is earnings before interest, tax, depreciation and amortisation; it measures the cash-like profit generated by core operations.

EBITDA = Operating profit + Depreciation and amortisation. Yatırımcı.AI computes quarterly and annualised EBITDA from the income statement and cash flow statement lines of KAP financial reports.

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