Earnings Before Interest, Depreciation and Amortization (EBIDA)

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Earnings Before Interest, Depreciation and Amortization (EBIDA)

EBIDA is a profitability metric that measures a company’s earnings after adding back interest, depreciation, and amortization to net income — but it retains tax expense. Because it does not add back taxes, EBIDA is a more conservative alternative to EBITDA.

What EBIDA shows

  • Focuses on operating performance while restoring interest, depreciation and amortization to net income.
  • Keeps taxes in the calculation, reflecting the actual tax expense of the business.
  • Useful for comparing companies within the same industry or analyzing tax-exempt entities (where taxes are irrelevant).

How to calculate EBIDA

Equivalent formulas:
* EBIDA = Net income + Interest + Depreciation + Amortization
* EBIDA = EBIT + Depreciation + Amortization − Taxes
(All required items appear on a company’s income statement.)

Example:
– Total revenue: $1,000,000
– COGS: $200,000
– Selling & admin: $150,000
– Depreciation: $50,000
– Amortization: $25,000
– Interest expense: $100,000
– Taxes: $35,000

Net income = 1,000,000 − 200,000 − 150,000 − 50,000 − 25,000 − 100,000 − 35,000 = $440,000
EBIDA = 440,000 + 100,000 + 50,000 + 25,000 = $615,000

Key considerations

  • EBIDA is more conservative than EBITDA because it does not add back taxes; EBITDA adds back taxes and typically produces a higher number.
  • It excludes some cash demands (e.g., capital expenditures and changes in working capital), so it is not a full proxy for free cash flow.
  • EBIDA is not standardized under GAAP; companies may calculate non-GAAP metrics differently, so comparisons require care.
  • Particularly relevant for tax-exempt organizations (nonprofits, some hospitals), where taxes have no impact.

Limitations and criticisms

  • Rarely used compared with EBITDA or EBIT; many analysts prefer the standardized EBITDA or operating measures.
  • Can be misleading if relied on alone — a company may show healthy EBIDA yet have poor cash flow once capex, working capital and taxes are considered.
  • Because EBIDA is non‑GAAP, it’s subject to discretionary adjustments and inconsistent definitions across firms.

What’s a “good” EBIDA?

  • A positive EBIDA is a basic baseline for operating viability, but it must be evaluated against capital needs, peer benchmarks, and long‑term sustainability.
  • Use EBIDA alongside other metrics (net income, EBITDA, free cash flow, capex coverage) to assess financial health.

Bottom line

EBIDA provides a conservative view of earnings by restoring interest, depreciation and amortization to net income while keeping taxes. It can be helpful for industry comparisons and tax-exempt entities, but because it omits important cash requirements and is not standardized, it should be used with other financial measures for a complete picture.