Profit/loss from the sale of fixed assets and intangible resources.
Posted: Wed Jan 22, 2025 10:04 am
In addition, the SEC's standard calculation methods do not allow ignoring additional elements in EBIT and EBITDA multiples other than accrued tax, interest payments, and depreciation. At the same time, net income calculated on the basis of US GAAP takes into account non-operating income and expenses. Accordingly, when assessing EBIT and EBITDA under IFRS, it is possible to use information that does not indicate whether they belong to extraordinary income or expenses.
Profit/loss from the sale of fixed assets and intangible resources.
This indicator is indicated in the advantages of truemoney database calculation of net profit for a certain period of time and does not reduce the value of EBIT and EBITDA. However, it is possible to take this value into account in an adjusted form when the corresponding business transaction is not typical for the company's activities and has a significant amount.
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Payments to employees and directors in equity instruments.
IAS 19 and IFRS 2 set out rules for accounting for share-based payments. Under these instructions, when the output from a business transaction involving share-based payments cannot be classified as an asset, it must be treated as an expense.
A number of companies subtract these values when calculating EBIT or EBITDA multiples, since they are non-monetary. However, with the standard approach to calculation, such expenses should not be deducted.
Income tax.
IAS 12 sets out the rules for accounting for income taxes that affect profitability in the financial statements. This includes not only current but also deferred tax. All such accruals must be taken into account in the EBIT and EBITDA formula.
Sometimes, when assessing these multipliers, companies replace the values of taxable profit with the amount of revenue and expenses.
It should also be noted that IFRS does not assume that withheld taxes on profit from dividends paid are included in the profit tax; they are part of the shareholder structure. In this regard, they are not included as elements of profit or loss in the EBIT and EBITDA formulas.
Other general income.
IFRS regulates in sufficient detail the rules according to which information on profit or loss, as well as other total income, must be reflected in the report.
Features of EBIT and EBITDA calculation
Most often, when assessing EBIT and EBITDA, the information in the profit or loss section is taken into account and the information in the other total income section is ignored.
The latter include values obtained as a result of the revaluation of fixed assets, intangible resources, pension contribution prospects, the effect of hedging on profit and loss, currency fluctuations, the result of joint activities in affiliated enterprises and common projects, revenue and losses on future taxes and a number of other elements of EBIT.
Profit/loss from the sale of fixed assets and intangible resources.
This indicator is indicated in the advantages of truemoney database calculation of net profit for a certain period of time and does not reduce the value of EBIT and EBITDA. However, it is possible to take this value into account in an adjusted form when the corresponding business transaction is not typical for the company's activities and has a significant amount.
Read also!
"USP examples to help you come up with your own that's even better"
Read more
Payments to employees and directors in equity instruments.
IAS 19 and IFRS 2 set out rules for accounting for share-based payments. Under these instructions, when the output from a business transaction involving share-based payments cannot be classified as an asset, it must be treated as an expense.
A number of companies subtract these values when calculating EBIT or EBITDA multiples, since they are non-monetary. However, with the standard approach to calculation, such expenses should not be deducted.
Income tax.
IAS 12 sets out the rules for accounting for income taxes that affect profitability in the financial statements. This includes not only current but also deferred tax. All such accruals must be taken into account in the EBIT and EBITDA formula.
Sometimes, when assessing these multipliers, companies replace the values of taxable profit with the amount of revenue and expenses.
It should also be noted that IFRS does not assume that withheld taxes on profit from dividends paid are included in the profit tax; they are part of the shareholder structure. In this regard, they are not included as elements of profit or loss in the EBIT and EBITDA formulas.
Other general income.
IFRS regulates in sufficient detail the rules according to which information on profit or loss, as well as other total income, must be reflected in the report.
Features of EBIT and EBITDA calculation
Most often, when assessing EBIT and EBITDA, the information in the profit or loss section is taken into account and the information in the other total income section is ignored.
The latter include values obtained as a result of the revaluation of fixed assets, intangible resources, pension contribution prospects, the effect of hedging on profit and loss, currency fluctuations, the result of joint activities in affiliated enterprises and common projects, revenue and losses on future taxes and a number of other elements of EBIT.