Result
EBITDA
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
EBITDA = net profit + loan interest + income tax + depreciation. All four items get added back to net profit because EBITDA is an attempt to see how much the business earned from operations alone, before financing choices, tax jurisdiction and asset depreciation rules affect the result.
Depreciation isn't a real cash outflow in the current period — it's an accounting spread of money already spent in the past on equipment or assets. Adding it back moves EBITDA closer to the operating cash result, but it isn't equal to it: EBITDA still ignores working capital changes and the current period's capital spending.
EBITDA is handy for comparing operating efficiency across companies with different debt loads, tax regimes or asset age — but that's exactly why it can't stand in for a cash flow metric: a company with high EBITDA can still run short of cash if it needs heavy equipment investment or working capital grows faster than profit.