The term EBITDA is a business indicator that provides information about the profitability of a company.
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Definition / explanation
Der Begriff EBITDA ist eine englische Abkürzung für „earnings before interest, taxes, depreciation and amortization“. Auf deutsch übersetzt bedeutet dies: Ergebnis vor Zinsen, Steuern und Abschreibungen auf Property, plant and equipment and Intangible assets.
The business key figure EBITDA indicates a distortion-free operating result and thus represents the operating profit. The key figure is intended to provide information about the profitability and efficiency of a company. However, this key figure is only partially meaningful due to the fact that various items in the income statement are factored out.
How is the EBITDA figure calculated?
The EBITDA key figure results from the profit after taxes.
+/- extraordinary result
+ Tax expense
- tax income
+/- financial result
+ Depreciation on fixed assets
- Write-ups on fixed assets
Where is the EBITDA indicator used?
Das EBITDA findet in verschiedenen Bereichen Anwendung. Dazu gehören unter anderem das betriebliche Controlling oder die Company valuation. Auch die Kreditwürdigkeit von Betrieben kann mit Hilfe der Kennzahl EBITDA besser eingeschätzt werden.
With regard to the profit-dependent measurement of manager salaries, EBITDA is only of limited informative value. Therefore, additional key figures must be included in the calculation for this purpose. The EBITDA key figure is not found in commercial law, but only appears in tax law.
The weakness of EBITDA is that it can be artificially increased by activating internal work.
The EBITDA margin is the ratio of the EBITDA key figure to sales. There are divided opinions regarding the informative value of the EBITDA margin. Some people feel that the EBITDA margin is not a meaningful statement.
Differences between EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA have some differences. The EBITDA margin calculation enables analysts and investors to compare companies of different sizes in different industries because it describes the operating profit as a percentage of sales. Adjusted EBITDA indicates earnings before interest, taxes, depreciation and amortization. It normalizes income, standardizes cash flow, and eliminates anomalies that often make it easier to compare multiple companies.