Question

How is EBITDA calculated?

Answer 1

To calculate EBITDA, you need to start with a company's revenue and subtract its cost of goods sold.

Then, you subtract its operating expenses (like salaries and rent).

This gives you the company's EBITDA.

 Example:

Let's say you and your friends sell lemonade from a stand.

You make $20 selling lemonade, but you spent $5 on lemons, sugar, and cups.

You also spent $5 on flyers to advertise your lemonade stand.

To calculate your EBITDA, you would start with the $20 you made selling lemonade, and subtract the $5 you spent on lemons, sugar, and cups.

This leaves you with $15. Then, you would subtract the $5 you spent on advertising.

This leaves you with an EBITDA of $10.

Answer 2

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is calculated by adding a company's operating income to its depreciation and amortization expenses. The formula for calculating EBITDA is:EBITDA = Operating Income + Depreciation + AmortizationOperating Income = Revenue – Cost of Goods Sold – Operating ExpensesDepreciation and Amortization are non-cash expenses that represent the gradual reduction in the value of assets over time. EBITDA is a commonly used financial metric to evaluate a company's profitability and cash flow. It is often used by investors and analysts to compare the financial performance of different companies, as it provides a standardized measure of a company's operating profitability.