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EBIT & EBITDA In Reach Reporting

Learn how to configure and utilize EBIT and EBITDA metrics for enhanced business analysis in Reach Reporting.

 

Understanding EBIT and EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a widely used financial metric that focuses on a company's core operating performance by excluding the impact of financing, tax environments, and non-cash accounting items.

This makes it a valuable tool for evaluating a company's ability to generate profit from its operations alone, offering a clearer perspective on operational efficiency.

EBIT stands for Earnings Before Interest and Taxes, providing insight into operational profitability before financing costs and tax obligations.

Setting Up EBIT and EBITDA

To configure EBITDA in Reach Reporting, start by navigating to the company settings, which can be accessed either from the workspace home or directly within your company.

Step 1: Access EBIT and EBITDA Settings

Once inside the settings, you'll notice an EBIT and EBITDA tab where you will find options for selecting the accounts relevant to your EBITDA calculation.

Step 2: Configure Account Mapping

These accounts include:

  • Taxes
  • Interest Expense
  • Interest Income
  • Depreciation
  • Amortization

You can select the accounts that align with your reporting needs. For example, by selecting the appropriate account, you can include taxes paid as part of the calculation.

Step 3: Understanding the Calculation

In terms of calculation, EBITDA is derived by adding back depreciation and amortization to operating income and by excluding interest and taxes. This allows you to assess profitability from operations alone without the influence of financing costs or tax obligations.

An important part of this process is understanding net interest expense, which is the difference between interest expense and interest income. This is a key component in determining your overall interest expense or benefit.

Using EBIT and EBITDA in Reports and Dashboards

Once you've completed the setup, you can access EBITDA data through your reports and dashboards. Although there isn't a specific EBITDA tag in the system, you can easily search for it in the dashboard library.

You'll find that some of the updated dashboards and reports now include EBITDA metrics. You can also hover over the dashboard descriptions to see the included metrics when generating reports.

Using the Data Picker

We can also use the data picker under "Ratios and Metrics" to select:

  • EBIT
  • EBITDA
  • EBIT Margin
  • EBITDA Margin

From the ratios and metrics section, these options are directly linked to the company's settings you configured, and they can be incorporated in your reports and dashboards as needed.

Important Considerations

Consolidations

For those using consolidated financials, note that EBITDA is not configured at the consolidation level. Instead, it must be set up for each individual company and the values will then flow through into the consolidated reports.

Budget Integration

Additionally, the EBITDA feature integrates smoothly with budget tools such as:

  • Budgets Pro
  • Excel budgets
  • QuickBooks Online budgets
  • Xero budgets

By setting up EBITDA as an account, the system will ensure that your budgets include the correct calculated values for EBITDA, helping you better align your financial planning with actual performance.

Benefits of Using EBIT and EBITDA

EBIT and EBITDA metrics provide valuable insights for:

  • Operational Performance Analysis: Focus on core business operations without external factors
  • Comparative Analysis: Compare performance across different periods and companies
  • Investment Evaluation: Assess cash generation capabilities from operations
  • Financial Planning: Integrate with budgeting tools for comprehensive planning
  • Performance Benchmarking: Monitor operational efficiency over time

If you have any questions about this feature, let us know.

 

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