Adjusted EBITDA for Depreciation that's embedded in Cost of Sales?

Water Cooler Investing
#1

Hi guys:

I’m building a model for an equipment rental company. The company accounts for “Depreciation of equipments on rent” within its Cost of Sales. Therefore, in its reported EBITDA, depreciation of equipments on rent is not added back.

Should I adjust the EBITDA by adding back the depreciation of equipment on rent please? Would really appreciate your thoughts, thank you!

#2

Use the depreciation and amortization reported on the cash flow statement which will include everything.