EBITDA
EBITDA is earnings before interest, taxes, depreciation, and amortization. It strips out financing and non-cash accounting effects to approximate the cash a business generates from operations, which is what most leverage and coverage tests are built on.
Formula
EBITDA = Net Income + Interest + Taxes + Depreciation + AmortizationEquivalently, you can build it up from operating income by adding back depreciation and amortization.
A note on adjustments
In leveraged lending, the fight is usually over “adjusted” EBITDA. Add-backs for one-time costs, owner compensation, or projected synergies can flatter the number and understate leverage. A disciplined credit process defines which add-backs are allowed and documents each one.
Why it matters
EBITDA anchors leverage (debt to EBITDA), interest and fixed-charge coverage, and the cash flow used in a global cash flow analysis. Inconsistent EBITDA undermines every ratio downstream.
How VisibleSignal computes EBITDA
VisibleSignal spreads the income statement, computes EBITDA, and itemizes any add-backs so they are visible and reviewable rather than buried. Each figure links to the source statement, so credit and audit can see how the number was built.
See also: DSCR, global cash flow analysis, financial spreading.
