EBITDA provides a clear picture of a company’s operational performance by focusing on its core operations. It’s used by businesses and investors to assess the financial performance and profitability of a company. This allows for a more accurate assessment of how well a company is performing in terms of generating profits from its core business activities.
EBITDA = Operating Profit + Depreciation + Amortization.
The calculation starts at the end number of the income or net statement. Add back Interest charged and Tax amount in Net Income. Depreciation and amortization also need to be added in Operating Profit. These values are placed in the statement of cash flow.
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
In income statement, net income reflects the total revenue after subtracting the cost of goods/services and operating expenses, Interest expenses and tax. You have to have to add back all of these in Net income. Then You have to add depreciation and amortization also.