Below is an EBITA calculator, or Earnings Before Interest, Tax, and Amortization Calculator. Enter a company's net income, interest expenses in the period, tax expenses, and amortization expenses to compute its EBITA.
What is EBITA?
EBITA, or Earnings Before Interest, Tax, and Amortization, is an alternative measure of earnings that goes a step beyond EBIT and adds back a company's accounting expense for amortization. Amortization is an accounting fiction, in the sense that amortization isn't tied to cash moving out of the company, but (here) instead a mark down on an intangible asset.
The more 'letters' you add to earnings, the less reliable your earnings number. Some companies, especially serial acquirers and conglomerates, will have significant continuing amortization charges as they continually engage in M&A.
Both EBITA and EBITDA – which also adds back depreciation on tangible assets – better approximate a company's current cash flows. Like EBIT, all the earnings adjustments attempt to normalize a company's earnings for capitalization structures and management styles. However, they can be misleading if you don't carefully evaluate the inputs to the assumptions.
The formula for EBITA is:
EBITA=net\ income+interest\ expense+\\\ tax\ expense+\ amortization
- Net Income: Net income from the income statement
- Interest Expense: Amount the company paid in the period to service its debt
- Tax Expense: Amount paid in taxes in the period
- Amortization: Amount the company took in amortization charges in the period