Syntax error What are steps involved in calculating EBITDA and EBITDA coverage ratio or How EBITDA and EBITDA ratio is calculated?

What are steps involved in calculating EBITDA and EBITDA coverage ratio or How EBITDA and EBITDA ratio is calculated?

Solution

The solution is explained below −

      EBITDA = Np+In+Ta+D+A
   EBITDA = 175000+20000+35000+8000
      EBITDA= 238000/-

Here, Np=Net Profit, In=Interest, Ta=Taxes, D = Depreciation, A= Amortization

      EBITDA= OI*+ D+ A
   EBITDA = (525000-200000-95000) + 8000
      EBITDA = 238000/-

Here, OI* = Operating Income, D = Depreciation, A= Amortization

(*Operating income (OI) = total revenue – cost of goods sold – operating expenses)

      EBITDA Coverage Ratio = (EBITDA+LP)/ (IP+PP+LP)
   EBITDA Coverage Ratio = (238000+15000)/ (5000+7500+15000)
      EBITDA Coverage Ratio = (253000)/ (27500)
         EBITDA Coverage Ratio = 9.2

Here, LP = Lease payments, IP= Interest payment, PP = Principal payments.

Updated on: 2020-09-25T14:26:20+05:30

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