Series 79: Calculating EBITDA

Calculating EBITDA

EBITDA is a non-GAAP measure, meaning its calculation is not standardized, and it is not normally reported on the financial statements of public companies. EBITDA is quite simple to calculate, however, especially since its name actually describes the elements that should be included and excluded.

To derive a company’s EBITDA, start with its income statement. If the income statement reports operating income, or operating profit (not all do), note that number since it already excludes interest and taxes. If it does not, calculate operating income by taking net income and adding back interest expense and income tax expense. Operating income is the same as EBIT (see the following section).