# Question on EBIT Calculation [closed]

I am trying to calculate the EBIT and a few other financial calculations from the following Income Statement. What numbers would I have to correspond in order to calculate EBIT or EBITDA here?

A:Revenues: 1 + 2 + 3 + 4 + 5 + 13 + 14 + 16
B:Expenses: 6 + 7 + 9 + 10 + 15 + 17 + 19
C:EBITDA: A + B
D:EBIT: C + 8 + 11 +12 + 18
Net Income: D + 20


Am I correct in firstly splitting it into Revenue and expenses?

    Income statement
1. Net Turnover
2. Variation in stocks of finished goods and work in progress
3. Works for its own assets
4. Supplies
5. Other operating income
6. Labour cost
7. Other operating costs
8. Amortization of fixed assets
9. Allocation of subventions on non financial investments and other
10. Provisions excess
11. Deterioration and result for fixed assets disposal
12. Negative difference of business combinations
13. Other results
A) Operating result (1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12 + 13)

14. Financial income
a) Allocation of financial legacies, grants and subventions
b) Other financial income
15. Financial expenses
16. Reasonable value variation on financial instruments
17. Exchange differences
18. Deterioration and result for disposal of financial instruments
19. Other income and expenses of a financial nature
a) Addition to assets of financial expenses
b) Income from financial arrangements with creditors
c) Other income and expenses
B) Financial result (14 + 15 + 16 + 17 + 18 + 19)

C) Result before taxes (A + B)

20. Taxes on profits

D) Exercise result (A4 + 20)

• I'm voting to close this question as off-topic because it is about accounting. – LocalVolatility Dec 11 '17 at 13:44

Basically everything seems to be flawed including revenues and expenses.

I have no idea what accounting standards you are following here, but I'd recommend you try and understand what you are actually calculating instead of throwing together more complex single items.

Revenues: everything, that a business receives for its normal business activity; financial income etc. is only later added into the pre-tax income (EBT)

EBIT: is your operating income, i.e. revenues less the expenses that were incurred from generating the given revenues. Interpretation: what does the firm earn (before interest/taxes) from its core business activities?

EBITDA vs. EBIT: We add back Net Depreciation and Amortization onto EBIT, because they actually do not resemble cash outflows in reality; EBITDA is supposed to be a cash flow proxy - especially in IB this is heartily debated, as obviously CAPEX plays a huge role when estimating cash flows

EBIT vs. EBT: Your EBIT calculation seems to be net of interest expense, which is wrong: remember that taxes are applied after deducting interest (i.e. EBT) instead of before (EBIT).

Takeaway: Although supposed to be standardized, the income statements (especially singular items) will differ between firms, therefore it makes a lot more sense to understand and be able to interpret what you are calculating instead of following some generalized scheme. I hope this helped you.