Earnings before Interest Tax Depreciation and Amortisation (EBITA) is calculated by taking the Net Profit of a business and adding back the:

1. Interest;

2. Tax;

3. Depreciation; and

4. Amortisation.

This can be a useful Key Performance Indicator (KPI) as it shows more of the Operational Profit of the business.

Removing the Interest; Tax; Depreciation and Amortisation of the business removes the effects that the capital structuring has on the business, i.e. the operational performance of the business is largely segregated.

This KPI is used with businesses that have large asset structures such as plant and equipment or large amounts of debt.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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