EBITDA is not currently a recognized or defined metric under International Financial Reporting Standards (IFRS). It is considered a non-IFRS measure commonly used by companies for analysis but is not part of the standard, audited financial statements. However, IFRS 18 (effective 2027) plans to introduce standardized operating profit figures.
Calculations can differ: Neither the Generally Accepted Accounting Principles (GAAP) nor the International Financial Reporting Standards (IFRS) use EBITDA. The lack of standardization means companies can adjust what goes into their EBITDA calculation.
Defining EBITDA on a “pre-IFRS 16” or frozen GAAP basis. Adding back IFRS 16 depreciation and interest to reported EBITDA. Treating lease liabilities as financial debt when calculating net debt/EBITDA, gearing, and interest coverage.
EBIT and EBITDA are two of the most commonly used non-GAAP measures and may be used to assess a registrant's performance, its liquidity, or in some cases both.
EBITDA is operating profit excluding impairment losses, depreciation and amortization, and gains/losses on fixed asset disposals.
International Financial Reporting Standards (IFRS) – as the name implies – is an international standard developed by the International Accounting Standards Board (IASB). U.S. Generally Accepted Accounting Principles (GAAP) is only used in the United States.
“EBITDA is widely used in the financial industry,” Cao says. “It makes it easy to compare the core profit and potential of two companies in the same industry.” Financial institutions also often use EBITDA as part of loan conditions known as debt covenants.
Because EBITDA is a non-GAAP measure, the way it is calculated can vary from one company to the next. It is not uncommon for companies to emphasize EBITDA over net income because the former makes them look better.
1 EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.
However, ASC 842 alters the classification of lease expenses: Lease expenses for finance leases are now divided into amortization (depreciation of the right-of-use asset) and interest expense (on the lease liability), both of which are excluded from EBITDA calculations.
PBT: Excludes only income tax, representing a company's profit from core operations before tax obligations. EBITDA: Excludes income tax, depreciation, amortization, and interest expense, offering a view of profit generation solely through operational activities.
The impact of IFRS 16 on net profit/loss
This may affect the amount of net profit/loss, and, by extension, deferred tax assets or liabilities, and the value of the company's equity through changes in profits/losses brought forward. As already mentioned, all differences are counterbalanced by the end of a contract term.
EBITDA provides a clearer picture of a company's earning potential without being distorted by factors like tax policies or capital structures. Additionally, EBITDA allows investors to compare companies across different industries, making it a helpful tool for analyzing potential investments.
The International Financial Reporting Standards (IFRS) are accounting rules for public companies with the goal of making company financial statements consistent, transparent, and easily comparable around the world. This helps with auditing, tax purposes, and investing.
EBITDA is not a metric recognized under U.S. Generally Accepted Accounting Principles (GAAP) but is one of the most popular non-GAAP earnings measures. Some analysts do not like EBITDA figures, because it can be used to paint a misleading picture of a business and its profitability.
US GAAP requires that fixed assets are measured at their initial cost; their value can decrease via depreciation or impairments, but it cannot increase. IFRS allows companies to elect fair value treatment of fixed assets, meaning their reported value can increase or decrease as their fair value changes.
Although EBITDA is widely used, it is not necessarily a legitimate measure of a company's success, and is often used as an initial guideline prior to deeper analysis. Warren Buffett has famously called EBITDA “utter nonsense”.
10X EBITDA refers to a company's earnings before interest, taxes, depreciation, and amortization (EBITDA) multiplied by 10. It is a valuation metric investors and analysts use the calculator to evaluate and compare companies, especially for acquisition purposes.
EBITDA is often found at the bottom of income statements (also known as profit and loss statements). That said, EBITDA isn't considered an official measure of financial health by GAAP, meaning it's up to you whether you'd like to include it in your P&L or not.
“People who use EBITDA are either trying to con you or they're conning themselves. Telecoms, for example, spend every dime that's coming in. Interest and taxes are real costs.” Like taxes, paying interest on borrowed money doesn't affect business operations, but it certainly affects the magnitude of earnings.
Coca-Cola's ebitda for fiscal years ending December 2020 to 2024 averaged 13.553 billion. Coca-Cola's operated at median ebitda of 13.601 billion from fiscal years ending December 2020 to 2024. Looking back at the last 5 years, Coca-Cola's ebitda peaked in September 2025 at 16.307 billion.