Understanding Income Statement, EBITDA, and Cash Flow

Income Statement

Revenue from contracts with customers

Changes in inventories of finished goods and work in progress

Supplies

Work carried out by the company for its capital assets

Other operating income

Other operating expenses

Expenses for employee benefits

EBITDA

Amortization and depreciation

Impairment on non-current operating assets

Capital grants transferred to income

Results from disposal of non-current operating assets

Operating Results

Finance income

Finance expenses

Changes in fair value of financial instruments

Exchange gains/(losses)

Impairment and gains/(losses) on disposal of financial instruments

Financial Results

Results of associated entities accounted for using the equity method

Earnings Before Taxes

Income tax expense

Net Income


EBITDA (Indirect Method)

Operating Results

  • + Amortization and depreciation
  • +/- Impairment on non-current operating assets
  • – Capital grants transferred to income
  • +/- Results from disposal of non-current operating assets
  • +/- Other non-recurring expenses/income
  • +/- Changes in non-trade provisions = EBITDA
  • +/- Impairment on current operating assets
  • +/- Change in trade provisions

EBITDA

  • +/- Impairment on current operating assets
  • +/- Change in trade provisions

Adjusted EBITDA

Operating Cash Flow

Adjusted EBITDA

  • +/- Changes in current operating assets
  • Inventories
  • Trade accounts receivable
  • Other operating assets (prepaid expenses)
  • +/- Changes in current operating liabilities
  • Trade accounts payable
  • Other operating liabilities (deferred income)

Change in Operating Working Capital

Operating Cash Flows Before Tax

Payments for income tax

Cash Flows From Operating Activities


Income Statement

Revenue from contracts with customers

Changes in inventories of finished goods and work in progress

Supplies

Work carried out by the company for its capital assets

Other operating income

Other operating expenses

Expenses for employee benefits

EBITDA

Amortization and depreciation

Impairment on non-current operating assets

Capital grants transferred to income

Results from disposal of non-current operating assets

Operating Results

Finance income

Finance expenses

Changes in fair value of financial instruments

Exchange gains/(losses)

Impairment and gains/(losses) on disposal of financial instruments

Financial Results

Results of associated entities accounted for using the equity method

Earnings Before Taxes

Income tax expense

Net Income


EBITDA (Indirect Method)

Operating Results

  • + Amortization and depreciation
  • +/- Impairment on non-current operating assets
  • – Capital grants transferred to income
  • +/- Results from disposal of non-current operating assets
  • +/- Other non-recurring expenses/income
  • +/- Changes in non-trade provisions = EBITDA
  • +/- Impairment on current operating assets
  • +/- Change in trade provisions

EBITDA

  • +/- Impairment on current operating assets
  • +/- Change in trade provisions

Adjusted EBITDA

Operating Cash Flow

Adjusted EBITDA

  • +/- Changes in current operating assets
  • Inventories
  • Trade accounts receivable
  • Other operating assets (prepaid expenses)
  • +/- Changes in current operating liabilities
  • Trade accounts payable
  • Other operating liabilities (deferred income)

Change in Operating Working Capital

Operating Cash Flows Before Tax

Payments for income tax

Cash Flows From Operating Activities


Earnings Before Taxes

  • +/- Adjustments (permanent and / or temporary differences)
  • = Preliminary taxable income
  • – Prior years’ tax losses
  • = Taxable income
  • × Tax rate
  • = Gross income tax
  • – Deductions and tax credits
  • = Income tax liability
  • – Withholdings and income tax advances Withholdings and prepayment

Income Tax Payable or Receivable