What is 'Earnings Before Interest, Depreciation and Amortization - EBIDA'

Earnings Before Interest, Depreciation and Amortization (EBIDA) is a measure of the earnings of a company that adds the interest expense, depreciation and amortization back to the net income number, but takes the tax expense into consideration. This measure is not as well known or used as often as its counterpart, earnings before interest, taxes, depreciation and amortization (EBITDA).

EBIDA = Net Income + Interest Expense + Depreciation + Amortization

BREAKING DOWN 'Earnings Before Interest, Depreciation and Amortization - EBIDA'

Earnings Before Interest, Depreciation and Amortization (EBIDA) is considered to be a more conservative valuation measure than EBITDA because it includes the tax expense in the earnings measure. The EBIDA measure removes the assumption that the money paid in taxes could be used to pay down debt, an assumption made in EBITDA. This debt payment assumption is made because interest payments are tax deductible, which, in turn, may lower the company's tax expense, giving it more money to service its debt. EBIDA, however, does not make the assumption that the tax expense can be lowered through the interest expense and, therefore, does not add it back to net income.

EBIDA's Drawback

EBIDA as an earnings measure is very rarely calculated by companies and analysts. It serves little purpose, then, if EBIDA is not a standard measure to track, compare, analyze and forecast. Instead, EBITDA is widely accepted as one of the major earnings metrics.

RELATED TERMS
  1. EBITDA - Earnings Before Interest, ...

    EBITDA stands for earnings before interest, taxes, depreciation ...
  2. Adjusted EBITDA

    Adjusted EBITDA is a measure computed for a company that looks ...
  3. EBITDA to sales ratio

    A financial metric used to assess a company's profitability by ...
  4. Amortization

    Amortization is an accounting technique used to incrementally ...
  5. Depreciable Property

    Depreciable property is any type of asset that is eligible for ...
  6. Amortized Bond

    A financial certificate that has been reduced in value for records ...
Related Articles
  1. Investing

    EBITDA

    Otherwise known as Earnings Before Interest, Taxes, Depreciation and Amortization. Learn more about this indicator of a company's financial performance.
  2. Investing

    EBITDA: A clear look

    This measure has its benefits, but it can also present earnings through rose-colored glasses.
  3. Investing

    Explaining amortization in the balance sheet

    Read to find out more about amortization, an important way to account for the value of intangible assets.
  4. Personal Finance

    Mortgage Amortization Strategies

    Should you get a 30-year mortgage? A 15-year one? Ways to decide which mortgage is the best fit.
  5. Investing

    How rental property depreciation works

    Rental property can prove to be a great investment. It's a bit tricky, but rental property depreciation can be a valuable tool to make your investment pay off.
  6. Taxes

    Recoverable Depreciation: How it Works

    Recoverable depreciation is a concept used in many insurance policies and claims.
  7. Investing

    Analyzing Operating Margins

    Learn how to analyze operating margins and how to put this aspect of equity analysis to work.
  8. Small Business

    Writing Off the Expenses of Starting Your Own Business

    Learn how to navigate the complicated rules for writing off the expenses of starting your own business. It could save you a lot of money.
  9. Investing

    Gross, Operating and Net Profit Margins

    A company’s income statement includes the company’s gross, operating and net profits.
RELATED FAQS
  1. What's the difference between amortization and depreciation?

    Learn the difference between amortization, depreciation, and depletion and how companies use these accounting methods to ... Read Answer >>
  2. What is the difference between operating margin and EBITDA

    Understand the key differences between, and purposes of, two measures of profitability that companies use: operating profit ... Read Answer >>
  3. Why is the EBITDA margin considered to be a good indicator of a company's financial ...

    Understand why the EBITDA margin is a good indicator of a company's financial health. Learn why it also has some drawbacks ... Read Answer >>
  4. How do I calculate an EBITDA margin using Excel?

    Learn about the EBITDA (earnings before interest, tax, depreciation and amortization) profit margin and how to use Microsoft ... Read Answer >>
  5. How does accumulated depreciation affect net income?

    Learn why accumulated depreciation does not directly affect a company's net income; understand where a company accounts for ... Read Answer >>
Hot Definitions
  1. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  2. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  3. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  4. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  5. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  6. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
Trading Center