Calculating EBITDA

Calculating EBITDA

Formula

EBITDA = Net profit
  + Interest expense
  - Interest income
  + Tax expense
  + Depreciation
  + Amortisation

Step-by-Step

1. Start with net profit (from financial statements)
2. Add back interest expense (net of interest income)
3. Add back tax expense
4. Add back depreciation and amortisation

Example

Net profit:           AED 30,000,000
+ Interest expense:      8,000,000
- Interest income:      (1,000,000)
+ Tax expense:           3,000,000
+ Depreciation:          5,000,000
+ Amortisation:          2,000,000
= EBITDA:             AED 47,000,000

30% of EBITDA:        AED 14,100,000
AED 10M cap:          AED 10,000,000
Deductible limit:     AED 10,000,000 (lower)

Important

EBITDA is calculated based on accounting figures, not tax-adjusted figures. The calculation follows IFRS.