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