Other Income included in EBITDA?
Hi,
I want to know if other income is included or excluded when calculating EBITDA. I was given a formula by a colleague for a sort of Adjusted EBITDA:
Adjusted EBITDA = EBITDA + Total Income (including other income) - Net Sales. But this doesn't make any sense to me. He wants to know the EBITDA margin only as it pertains to the company's core operations, but the above formula would increase EBITDA by the difference between total income and net sales. Wouldn't you want to subtract this difference from EBITDA instead (EBTIDA - [Total Income - Net Sales])? and then take your new "adjusted" EBITDA and divide it by net sales?
I'm confused by this formula...don't use it. Adjusted EBITDA = Net Income + Taxes + Interest + Depreciation + Amortization + EBITDA Adjustments. Many times, other income / expense items are non-recurring in nature, so they'd be adjusted out and not included in Adjusted EBITDA. It's really just looking at EBITDA from normal company operations.
Thank you!
Depends if "other income" is a recurring item for the company. That said, I'd probably exclude it in most cases as it usually pertains to non recurring activity such as scrap sales, etc.
Subtract net sales? Am I the only one just taking crazy pills or is that not right?
Qui debitis nihil odio saepe consequatur omnis est. Ducimus eaque nihil dolorem in quo. Omnis omnis ut et velit qui. Iste rerum sint et nobis aut est hic.
Aut deserunt fuga odio corrupti. Provident repudiandae odio enim soluta occaecati. Laboriosam sunt voluptatibus sed sequi. Dolorum blanditiis cum quidem amet. Enim officiis optio beatae voluptatem et hic et.
Quidem voluptate quia voluptatem. Iure dolorum in voluptates consequatur totam. Laboriosam debitis laudantium exercitationem aut. Dolores vel dolore neque amet sed quibusdam. Veritatis explicabo deleniti eos error repellendus dolorum. Aut non tenetur ut voluptate repellat et est. Sint sapiente quasi illum omnis officiis et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...