EBITDA is earnings before interest, taxes, depreciation and amortisation: the profit a business makes from its operations before the cost of its debt, its tax bill and the accounting charge for wearing out its assets. Calculate it from net profit by adding back tax, interest, depreciation and amortisation, or as operating revenue minus operating expenses. Worked example: net profit Rs 10 lakh + tax Rs 3 lakh + interest Rs 2 lakh + depreciation Rs 5 lakh = EBITDA of Rs 20 lakh; on Rs 1 crore of revenue that is a 20% EBITDA margin. Listed companies report it beside PAT (profit after tax). It is not cash: it ignores capital spending and working capital.
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A complete EBITDA reference: both ways to calculate it, why analysts use it, its limits (it is not cash flow) and how the EV/EBITDA multiple is used in valuation.
Zerodha Varsity's chapter on profitability ratios, worked on a real Indian company's results. It defines EBITDA as operating revenue minus operating expense and walks through EBITDA margin and PAT margin.
The second half of Varsity's P&L walkthrough, covering finance costs, depreciation, tax and profit after tax, with reader questions on EBITDA answered in the comments.
Varsity's line-by-line reading of an Indian company's profit and loss statement: revenue, other income, expenses and how they are presented in an annual report.
