Intern here, can someone help me with a finance question. thanks!
I am trying to get down from Ebit to pre tax income (EBT).
I am looking at the company’s financials and see that I would have to take out interest in order to get to EBT. However, on their accounts it shows as short term - interest income. Would this count as the interest or does it have to be interest expense only?
Also is there a way to go down from EBIT to EBITDA and then take EBITDA all the way down to pre tax income EBT? wouldn’t you just take out interest and D&A? I saw my manager do this, but he never added back interest to get from EBIT to EBITDA so a little confused
For the second question, when you go from EBIT to EBITDA, your manager was right not to add back interest. The only difference between EBIT and EBITDA is the "DA" part.
Sales -Cogs =Gross Profit -Operating Expenses =EBITDA -D&A =EBIT - Net Interest (Interest Expense - Interest Revenues) =EBT
memorize and bounce up and down how you see fit
D&A are part of operating expenses. So it should actually say EBIT after you subtracted operating expenses. Rest is correct
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