EBITDA Adjusted

Last Updated: Jun 7, 2019

Created By :

Last Edited By :

Created On :

Net Income + [Total Interest Expense, Income Taxes, Depreciation and Amortization, permitted EBITDA Add-Backs, and Non-Cash Charges for Share-Based Compensation]

EBITDA Adjusted represents EBITDA plus any negotiated add-backs or non-cash items not included in the standard definition of EBITDA. This amount will be used in place of EBITDA in the calculation of Fixed Charge Coverage, Debt Service Coverage or Leverage when additional items, known as "Add-Backs", are permitted to adjust EBITDA to eliminate certain non-recurring, non-operating, extraordinary or non-cash expense items.

Measurement is typically done on an annual basis, but it can be used for any period in which the "Add-Backs" impact EBITDA. Many analysts will look at 3-year or 5-year average adjusted EBITDA to smooth out the data. The higher the Adjusted EBITDA margin the better. Different firms or analysts may arrive at slightly different adjusted EBITDAs due to differences in their methodology and assumptions. As such, these figures are often not made available to the public, while non-normalized EBITDA is typically public information. It is important to note that adjusted EBITDA is not a Generally Accepted Accounting Principles (GAAP) standard line item on a company's income statement.