Know all about EBITDA Analayis

Thanks for sharing, CA Gopal Somani!

For those who are curious about EBITDA and want a quick overview before diving into the video, here's a summaryof what EBITDA is and how it's used:

🔍 What is EBITDA?

EBITDA stands for:

Earnings Before Interest, Taxes, Depreciation, and Amortization

It’s a key metric used to evaluate a company’s operational performance and profitability before the impact of financial and accounting decisions.

🧮 How to Calculate EBITDA

EBITDA = Net Profit + Interest + Taxes + Depreciation + Amortization

Or, if starting from operating profit (EBIT):

EBITDA = EBIT + Depreciation + Amortization

Example:

If a company has:

• Net Profit: ₹10 lakh

• Interest: ₹2 lakh

• Taxes: ₹1 lakh

• Depreciation: ₹1.5 lakh

• Amortization: ₹0.5 lakh

Then,
EBITDA = ₹15 lakh

💡 Why Is EBITDA Important?

1. Strips out non-operating expenses to show true operating performance.

2. Useful for comparing companies in the same industry (especially those with different capital structures).

3. A favorite in Valuation, M&A, and Credit Analysis.

📉 Limitations

• Doesn’t account for capital expenditure → can misrepresent cash flow.

• Ignores interest obligations → may mislead in debt-heavy businesses.

• Can be manipulated by excluding necessary costs.

📊 EBITDA Margins

EBITDA Margin = (EBITDA / Revenue) × 100%

This shows how much EBITDA is generated as a percentage of total revenue — a great way to compare profitability across companies.

🎥 Watch the Video Here for a detailed walkthrough in Hindi, especially useful for finance students, investors, or professionals looking to strengthen their analysis skills.