# EBITDA | Stocks and bonds | Finance & Capital Markets | Khan Academy

Then there are other items under operating profit You still have interest, I will list it for you– There are also non-operating income, interest and other items Let me write The interest assumption is also 5,000 If interest is what we care about So you have pre-tax income I did not include non-operating income Because we assume that cash does not generate any revenue Therefore, the pre-tax income is 30 (unit: thousand) If this is what we want to calculate Things slowly become a little complicated Let’s discuss your income tax situation Suppose the tax rate is 1/3 Income tax is 10,000 This gives the benefit 30 minus 10 equals 20 So I think this part of the income statement Is it purely determined by this one? This part with interest Depends on liabilities And income tax essentially depends on liabilities Because the more interest The more tax deductible your interest So this whole following piece depends on Your capital structure So if you just want to know What does corporate value generate What it generates is operating profit So I recommend using a good ratio Although this ratio is not commonly used Actually it’s not that it’s non-traditional But you don't hear much I think you can use the ratio of corporate value to operating profit As a good metric This ratio is the inverse of the return on assets in many cases As I defined in the first video There are many definitions of return on assets But in essence, it’s an operating profit per dollar What is the corporate value created I think this ratio is a good standard The more consistent metrics we see so far are When you see people discussing corporate value Is the ratio of corporate value to EBITDA If you go to a certain company to do research and analysis work This will become a tool The tools a company wants you to use We now hope to discuss it rationally and reasonably The first question is Reasonably and reasonably discuss what is EBITDA? EBITDA refers to the deduction of interest, taxes, and depreciation Profit before amortization Now let's see what it will be here It is deduction of interest, taxes, depreciation And the profit after amortization So it precedes all these projects Actually let us compare with the one mentioned earlier You have EBITDA EBIT too EBIT refers to the profit before interest and income tax are deducted EBIT refers to profit After adding back income tax and interest You will get operating profit I have reviewed this in the past But the difference between operating profit and EBIT is EBIT may include some non-operating income And here I didn’t take non-business income into account But if the cash generates part of the income And this part of the income has nothing to do with business operations Then it should be included in EBIT It is not operating income But they are usually very close when discussing it For example, it is very close to non-financial This is EBIT If we want to get EBITDA You just need to add back the depreciation and amortization.