Understanding EBITDA – Definition, Formula & Calculation

Recorded Session
60 Minutes

EBITDA, short for earnings before interest, taxes, depreciation and amortization, measures operating performance by removing the effects of financing, tax and non-cash expenses. It is widely used but often misunderstood, and treating it as a stand-in for cash flow or earnings can lead to poor forecasts, wrong valuations and confused conversations with investors.

This 60-minute EBITDA training explains the definition, purpose and components of the metric and how to calculate it accurately. Using sample income statements, you'll work through both the top-down and bottom-up formulas by hand.

You'll also compare EBITDA with net income, operating income and cash flow, and get an introduction to adjusted EBITDA.

WHY SHOULD YOU ATTEND?

If you read financial reports, evaluate performance or work on budgets and forecasts, you need to understand the numbers you use. Misreading EBITDA can mean overstating profitability or missing signs of financial stress.

This session explains EBITDA in plain terms so finance, accounting, management and business analysis staff at any level can use it accurately in reports, presentations and decisions.

AREA COVERED

  • What EBITDA stands for and what each component means
  • Why EBITDA is used and what it shows
  • EBITDA vs net income vs operating income vs cash flow
  • Calculating EBITDA step by step from an income statement
  • Top-down and bottom-up calculation approaches
  • Example walkthroughs using real-world figures
  • Adjusted EBITDA and common adjustments
  • Risks and limits of relying only on EBITDA
  • When EBITDA is most useful: valuation, comparisons and performance reviews
  • Communicating EBITDA accurately in reports and presentations
  • Key questions to ask when reviewing EBITDA

LEARNING OBJECTIVES

  • Define EBITDA and explain each component it excludes
  • Explain why companies, investors and analysts use EBITDA
  • Distinguish EBITDA from net income, operating income and cash flow
  • Calculate EBITDA from an income statement using top-down and bottom-up methods
  • Describe adjusted EBITDA and common adjustments
  • Recognize the limits of EBITDA and when it is most useful
  • Communicate EBITDA accurately and ask the right review questions

WHO WILL BENEFIT?

  • All levels

If you read financial reports, evaluate performance or work on budgets and forecasts, you need to understand the numbers you use. Misreading EBITDA can mean overstating profitability or missing signs of financial stress.

This session explains EBITDA in plain terms so finance, accounting, management and business analysis staff at any level can use it accurately in reports, presentations and decisions.

  • What EBITDA stands for and what each component means
  • Why EBITDA is used and what it shows
  • EBITDA vs net income vs operating income vs cash flow
  • Calculating EBITDA step by step from an income statement
  • Top-down and bottom-up calculation approaches
  • Example walkthroughs using real-world figures
  • Adjusted EBITDA and common adjustments
  • Risks and limits of relying only on EBITDA
  • When EBITDA is most useful: valuation, comparisons and performance reviews
  • Communicating EBITDA accurately in reports and presentations
  • Key questions to ask when reviewing EBITDA
  • Define EBITDA and explain each component it excludes
  • Explain why companies, investors and analysts use EBITDA
  • Distinguish EBITDA from net income, operating income and cash flow
  • Calculate EBITDA from an income statement using top-down and bottom-up methods
  • Describe adjusted EBITDA and common adjustments
  • Recognize the limits of EBITDA and when it is most useful
  • Communicate EBITDA accurately and ask the right review questions
  • All levels
Currency:
Webinar Option
Transcript (PDF Transcript of the Training)
Downloadable Recorded Session
USB

Speaker Profile

ins_img Justin Muscolino

Justin brings over 20 years of wide-ranging experience in compliance, training, and regulation in the financial services sector. Most recently, he served as Head of Compliance Training at Bank of China, where he led the compliance training function and created and monitored the annual training plan through a thorough training needs analysis. Previously, he served as Macquarie Group’s Head of Americas Compliance Training and J.P. Morgan Chase’s compliance training manager. He also worked for FINRA, a US regulator, where he created Examiner University to train examiners on how to perform their function.

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