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OIBDA - what is it in simple terms. What is EBITDA: I explain it in human language using the simplest example How does ebitda differ from oibda?

Operating Income Before Depreciation And Amortization ) is an analytical indicator that means operating income before deducting depreciation of fixed assets and amortization of intangible assets.

OIBDA = Operating Income + Depreciation intangible assets+ depreciation of fixed assets

OIBDA should be distinguished from EBITDA as the starting point of the indicator is operating profit, not net income. As such, OIBDA does not include non-operating income, which generally does not recur from year to year. It includes only income earned from recurring transactions and is not subject to lump-sum charges, such as those related to exchange rate differences or tax credits.

Concept

EBITDA is an analytical indicator that shows the volume of the company's profit, excluding the cost of paying interest on loans, income tax and depreciation charges... This is how this abbreviation stands for: Earnings before Interest, Taxes, Depreciation and Amortization.

This profit is calculated on the basis of accounting documents that comply with either US GAAP or regulations International standards financial statements (or abbreviated IFRS).

If desired, EBITDA can also be found when using the balance sheet compiled according to the rules of RAS... You will learn how to do this further.

So what does this indicator reflect?

With the help of EBITDA, we are able to assess the relatively “net” performance of the company for reporting period, without taking into account the features tax system the state in which the company operates, its debt burden and without monetary items accounting.

Thus, we can demonstrate the cash flow of any business.

Therefore, this indicator is so popular among Western investors, banks and financial analysts, although it does not apply to IFRS or US GAAP standards, but is only calculated on the basis of documentation created according to these regulations. EBITDA makes it possible to assess well the attractiveness of a company for a takeover, loan or investment. In addition, it is quite simple and quick to calculate, which is another of its advantages, but for accountants.

But any medal has a downside - when calculating this indicator, a distortion of the real state of affairs of an enterprise is possible. This is largely due to depreciation charges - in some industries, the cost of purchasing and modernizing fixed assets (equipment, infrastructure and buildings) can have a significant impact on the amount of profit.

But you can lose sight of this point if you evaluate the efficiency of the company only by EBITDA.

And then, after the takeover of the company or investments in its activities, to find out that, due to the specifics of the industry to which the company belongs, it requires huge funds to update and improve the means of labor, and for this reason the expected profit will be much less.

Therefore, EBITDA is good for a “first acquaintance” and a quick assessment of a company, but further activities will require you to conduct a deeper analysis of the company's effectiveness and prospects for its development.

However, it is worth repeating that, despite the above disadvantage, it does its job well in assessing the firm's ability to service debt or in benchmarking - comparing the company's performance with benchmarks and comparing it with other enterprises in the same field of activity.

It should be remembered that EBITDA, due to its quick calculation, is a “quick test” of a firm's solvency, which is used by some foreign banks.

Therefore, if your company plans to take a loan abroad, then it is imperative to calculate and analyze it.

Types of indicators

In addition to the profit before interest, taxes and depreciation deductions, there are its derivatives, designed to clarify some points that arise when assessing the attractiveness of a company to issue a loan or to take over someone's business.

Let's start with the EBITDA margin.

And how to calculate it, and why it is needed, you can read below.

The next derivative is the debt-to-EBITDA ratio. It represents the ratio of all debts (and with a period of up to 12 months or more) of the company to the profit we calculate. The meaning of this indicator is to demonstrate the level of debt burden on the firm and its ability to service these obligations.

A good ratio (also known as Debt / EBITDA in English literature) is 3 or less. If the value is more than 4-5, then the company is experiencing difficulties in servicing its own debts.

On its basis, two more derivatives of EBITDA can be distinguished:

Net Debt / EBITDA is the ratio of net debt (the aggregate of all the company's liabilities, minus its cash and cash equivalents) to EBITDA.
EBITDA / Interest expense - the ratio of this profit to interest expense, or, speaking in simple words, overpayment on the loan.

Video on the topic

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Economics often surprises with the number of incomprehensible terms borrowed from different languages. Strange abbreviations and English concepts often associated with a dark forest can be easily explained in simple words. Today, an unusual "beast" is flickering in the business environment - EBITDA. Agree, the name is somewhat ridiculous - the desire to joke arises almost involuntarily, but behind this set of letters hides the usual profit, nothing anecdotal: everything is just like twice two.

Let's discuss what EBITDA is and how to calculate it. For clarity, let's turn to an example and make calculations based on the data of a specific organization.

EBITDA - what is it in simple words?

To understand what EBITDA is, it is best to start by deciphering the English abbreviation that emerged from the phrase “earnings before interest, tax, depreciation and amortization”. The literal translation reads as follows: "profit before deduction of expenses on payment of interest on loans, taxes, depreciation and amortization."

EBITDA is calculated based on accounting statements that complies with IFRS or American GAAP. From the above, it becomes clear that EBITDA is an analytical indicator that is widely used abroad for analysis. financial condition organizations. Of course, Russian companies can also calculate it using for this purpose balance sheet... This will be especially useful if the management of the enterprise seeks to establish international relations and bring the business to a new level. The bottom line is that potential foreign counterparties are accustomed to assessing the financial position of partners by calculating a number of indicators, among which profit before interest, taxes and depreciation plays an important role.

Advice: if you are interested in foreign methods, then you should pay attention to, since it focuses on the strong and weaknesses company and gives a chance to identify opportunities and threats to external environment... Key performance indicators () are also very popular, helping to develop an effective strategy for the company's development.

How to calculate EBITDA - step by step instructions

EBITDA is not used in accounting, that is, Russian companies are not at all obliged to calculate it, but trading today is such a competitive environment that every forward-thinking businessman wants to attract new investors. Those who invest in someone else's business at least want to know how much it costs. This is why EBITDA is usually calculated. How to calculate the indicator? We will try to answer this question in simple language, considering two options for finding the desired profit.

The first way

To find out the value of EBITDA, you will need:

Determine the amount of income tax expenses;
Calculate the refunded income tax;
Find out the amount of received and paid interest payments;
Make depreciation deductions;
Revaluate assets.

Then the original formula for calculating the indicator will look like this:

EBITDA= Net income + Income tax expense - Income tax refunded - Extraordinary income+ Extraordinary expenses + Interest paid - Interest received + Depreciation - Revaluation of assets.

This formula complies with the requirements of IFRS and GAAP, which means that the calculation of EBITDA made on it will represent exactly the information that foreign investors want to receive.

Important: in order to calculate the net profit, it is very important to correctly approach the determination of costs - Special attention should be turned to.

Second way

This option is maximally adapted to Russian norms accounting, which allows you to make calculations using only annual reports, without resorting to searching for additional data, which, of course, greatly facilitates the process of calculations.

EBITDA= Profit before tax + Interest paid - Interest received + Depreciation.

The data for the calculation should be taken from the Report on financial results companies. In the document, each line has its own code, so the formula can be rewritten as follows:

EBITDA= line 2300 + line 2330 - line 2320 + Depreciation.

The amount of depreciation deductions is taken from annual reporting... It should be borne in mind that the calculation according to this formula does not make it possible to obtain a result devoid of some error, since the original version of the calculations involves working with a large amount of data.

Example of calculating the EBITDA indicator

Of course, any information is easier to perceive if the theory is confirmed by practice, so let's consider an example of calculating EBITDA. We will take as a basis data from the financial statements of the organization Teremok LLC, which is engaged in the trade in construction materials.

Index	Amount, thousand rubles
Net profit	224 512
Income tax expense	41 345
Reimbursed income tax	578
Extraordinary expenses	25 648
Extraordinary income	36 890
Percentage to be paid	29 778
Interest receivable	11 345
Depreciation deductions	30 743
Revaluation of assets	8 500

EBITDA= 224 512 + 41 345 - 578 + 25 648 - 36 890 + 29 778 - 11 345 + 30 743 - 8 500 = 294 713 thousand rubles.

Pros and Cons of EBITDA Methodology

Like any other method of analyzing the financial condition of a company, EBITDA has a number of not only advantages, but also disadvantages.

The pluses include the following points:

Simplicity and ease of calculating the indicator;
Information for determining the value of EBITDA is usually freely available;
Evaluation of a business through EBITDA makes it possible to present the state of affairs in a more favorable light than it actually is;
Many investors are guided by the indicator in question.

But some negative aspects of the method can be highlighted:

Lack of legislative approval this method assessments of the financial condition of the company - in none accounting document there is not a word about EBITDA, that is, this method has no official confirmation;
The formula by which the calculations are carried out does not take into account force majeure and various secondary factors that can, to some extent, affect the final result;
Investors who analyze a company using EBITDA can be greatly mistaken in the belief that the organization is doing much better than it actually is, since the methodology discussed in some cases significantly distorts the real situation.

Thus, the voiced shortcomings indicate that EBITDA is far from always useful when calculating a company's profitability.

How does EBIT differ from EBITDA?

EBIT is not some abstract number that is calculated for the sake of a tick. And to the field of reasoning and planning, as, for example, it can not be attributed. The metric is necessary to value the business, that is, it actually determines the price that a hypothetical buyer might pay for the company. But, of course, the value of a business usually does not equal EBIT - its value is simply multiplied by a certain multiplier, which abroad ranges from 3 to 5 (for small and medium-sized enterprises). In simple terms, a successful and attractive business, as a rule, is estimated 3-5 times higher than EBIT. The formula for calculating EBIT, which is based on international reporting standards, is as follows:

EBIT= Revenue of the organization - Direct costs.

In simple terms, we can say that this is the gross profit of the company. To calculate the foreign equivalent of EBIT, you need to perform actions similar to those discussed above, however, depreciation deductions should not be taken into account. Then the formula will take the form:

EBIT= Net profit + Income tax expenses - The amount of income tax refund + Extraordinary expenses - Extraordinary income + Interest paid - Interest received.

That is, EBIT differs from EBITDA in that the latter takes into account the amount of depreciation and revaluation of assets. By calculating EBIT, you can quickly find out the value of EBITDA:

EBITDA= EBIT + Amortization deductions - Revaluation of assets.

How to calculate EBITDA margin?

In foreign practice, there is often an indicator called EBITDA margin. It represents the ratio of EBITDA to revenue:

EBITDA margin= EBITDA / Sales Revenue.

EBITDA profitability is usually calculated when it is necessary to know the profitability of the company as a whole, that is, before an adjustment is made through the applicable tax system or the existing debt burden.

EBITDA margin is used when comparing the performance of a number of companies with different capital structures, but approximately the same field of activity. Experts believe that a company is developing well if its profitability exceeds 12-15%.

Summing up

EBITDA is an analytical indicator used by investors and banking structures to assess the financial position of a company. Calculating it is no more difficult than doing it, however, for this it is necessary to have at the disposal of the organization's financial statements.

At present, in the conditions of Russian reality, the methodology for calculating EBITDA is not enshrined in legislation in any way. It is difficult to say whether this is good or bad, since the discussed indicator, with all its simplicity of calculation and seeming informational content, often distorts the real state of affairs, misleading counterparties or hypothetical business buyers.

In modern Russian business, more and more foreign words and abbreviations have begun to be borrowed, which no one heard about 25 years ago. Now these terms are found everywhere. Today we will analyze two quite popular ones: OIBDA and EBITDA. Both terms refer to the financial analytical performance of a company and reflect the ability to respond according to its performance.

What is EBITDA.

EBITDA (Earnings Before Interest, tax, depreciation and Amortization) in Russian, the word is pronounced as EBITDA in translation means "profit before interest, taxes and depreciation." In essence, this means that EBITDA is gross profit before deducting accrued interest, dividends, before taxes and before deducting depreciation from it on fixed assets and intangible assets. First of all, EBITDA shows the company's profit, excluding non-monetary items of expenses, that is, based on EBITDA, one can estimate investment attractiveness companies, profitability and self-financing reserves.

What is OIBDA.

OIBDA stands for Operating Income Before Depreciation And Amortization. OIBDA is financial indicator company, meaning operating income before depreciation and amortization. OIBDA serves for a more accurate assessment of the company's solvency, since it does not include non-recurring income and expenses.

Differences between OIBDA and EBITDA.

The main difference between OIBDA and EBITDA is that OIBDA is more stable and difficult to adjust in the short term. This means that, when assessing capital risks, the investment OIBDA will more accurately reflect the situation in the company for the future. Since, unlike EBITDA, OIBDA calculations use not net profit, but operating profit (profit from transactions that are of a regular nature).

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The multiplier ( economic term) EBITDA (EBITDA) - what is it and what is it used for? In this article, you will find out what it is for, how it is calculated and whether it is worth focusing on it when choosing a company for investment.

1. What is EBITDA in simple words

EBITDA(from the English "Earnings before Interest, Taxes, Depreciation and Amortization" - "profit before interest on loans, tax and amortization deductions") is economic indicator which reflects the company's cash flow. Often pronounced in Russian: "EBITDA", but in the language one can hear "EBITDA".

From the name it is clear that this figure does not include any costs. And there is only income.

Officially, EBITDA does not appear in the reports and there is no uniform standard for it. However, on the other hand, it is referred to the global financial reporting standards. Even an ordinary investor can calculate it in just a minute due to the simplicity of the formula. Below we will look at the EBITDA formula.

Targets and goals

The main objective of EBITDA is to reflect the efficiency of the company in terms of generating money. Although this point causes a lot of controversy among experts. The main argument is that different industries have their own nuances. For example, if one company makes $ 1 billion and the other makes $ 2 billion, then the second company may seem to be better. But if it turns out that the first has overhead costs of $ 500 million, and the second has $ 1.8 billion, then the situation changes dramatically - the first business turns out to be much more profitable.

How investors apply the EBITDA indicator:

Evaluate the financial position of the issuer
Evaluate the applicant cash flow excluding loans, taxes, depreciation
Assess the competitiveness and solvency of the company
Probabilities of repayment of existing debts
Definition market value companies (capitalization)

2. Formulas for calculating EBITDA

EBITDA is calculated using financial statements that comply with IFRS (International Financial Reporting Standards) or American GAAP.

EBITDA = [Net Income] + [Income Tax Expenses] - [ Tax deductions] +
[Non-operating income and expenses] + [Interest payments] + [Depreciation] - [Revaluation of assets]

EBITDA = [Revenue] - [Cost] + [ Tax deductions] + [Interest payments] + [Depreciation]
or in another way:
EBITDA = [Profit before tax] (2300) + [Interest paid] (2330) - [Interest received] (2320) + [Depreciation]

When calculating the EBITDA indicator, the following items of income are not taken into account:

Exchange rate difference
Extraordinary income and expenses
Impairment losses different groups assets
Accrual of reserves for various needs
Rewards based on shares and other securities

3. Indicators EV, EBIT, OIBDA

1 EV (Enterprise value) means "company value". There is an EV / EBITDA ratio that shows the present value of a company based on EBITDA.

EV = [Capitalization] + [ long term duties] + [Short-term liabilities]

Depending on the industry and current situation in a country, EV / EBITDA can provide good information for analysis. It is also often plotted on a two-dimensional chart: one axis is Debt / EBITDA, and the other is EV / EBITDA. The companies on the bottom left will be the cheapest on these base multiples.

2 Operating profit OIBDA(Operating Income before Depreciation and Amortization) represents the operating income before depreciation of fixed assets and intangible assets.

OIBDA = [Operating Profit] + [Depreciation of Intangible Assets] + [Depreciation of Fixed Assets]

3 EBIT ("Earnings before interest and taxes"). This is operating income, excluding tax and interest. This is the so-called dirty operating profit. It is forbidden to include casual and non-recurring incomes here.

EBIT = [Net Income] + [Tax Expenses] - [Tax Refunded] + [Extraordinary Expenses] -
[Extraordinary Income] + [Interest Paid] - [Interest Received]
or:
EBIT = [Organizational Revenue] - [Direct Costs]

4. Pros and cons of EBITDA multiplier

Ease of calculating the indicator
Data availability
Many investors focus on EBITDA
Shows the company's ability to make money and allows comparison regardless of other conditions with others

Lack of standards for calculation
Does not take into account the necessary costs
It is impossible to assess the investment prospects only by EBITDA

See also the video "EBITDA: meaning, application, difficult issues":

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