Operating Income Before Depreciation and Amortization (OIBDA)

Operating Income Before Depreciation and Amortization (OIBDA)

What is OIBDA?

Operating profit before depreciation and amortization (OIBDA) is a non-GAAP measure of financial performance used by companies to show the profitability of continuing commercial activities, excluding the effects of capitalization and the tax structure.

Sometimes the OIBDA is also considered not to include elements such as changes in accounting principles which are not representative of basic operating results, revenues from discontinued operations and profits / losses of subsidiaries.

Calculated as:


OIBDA=OI + re + A + Tax + interestor:OI=Operating profitre=Depreciation begin {aligned} & text {OIBDA} = text {OI} + text {D} + text {A} + text {Tax} + text {Interest} & textbf {where:} \ & text {OI} = text {Operating result} \ & text {D} = text {Amortization} \ & text {A} = text {Amoritisation} end {aligned}

TheOIBDA=OI + re + A + Tax + interestor:OI=Operating profitre=DepreciationTheThe

Understanding OIBDA

Operating profit before depreciation (OIBDA) is gaining ground as companies stop using profit before interest, taxes, depreciation and amortization (EBITDA). These two measures are similar except in terms of the income figures they use. In OIBDA, the calculation begins with GAAP net operating profit. In EBITDA, the calculation begins with GAAP net income.

Unlike EBITDA, OIBDA does not include non-operating income. This is considered an advantage for comparison purposes, since non-operating income generally does not recur from year to year and its separation from operating income ensures that all income reflects only income from ordinary activities.

Since most valuation methods start with discounted cash flows, OIBDA is an important part of detailed financial analysis. Analysts will keep a close eye on the changes and patterns of this metric, as this could be a signal of changes in basic operations.

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