EBITDA

CFA Level I
#1

Please correct me if I’m wrong.

I assume that EBITDA is equal to Operating Income.

However, in a QBank question, the answer shows EBITDA = operating income + depreciation + amortization

I thought EBITDA is earnings before adding dep’n and amortization, interest and tax.

Thanks,

Seth

#2

EBITDA = EBIT + D + A

EBIT is operating income. We get operating income after deducting depreciation and amortization.

Revenue

  • COGS

Gross profit

  • SG&A

EBITDA

  • D

  • A

EBIT (operating income)

  • I

EBT

  • T

Net Income

#3

ok thanks,

I guess I’m confusing EBITDA and EBIT

#4

EBIT is usually operating income.

There are some slight differences, but for the exam, assume that they’re the same.