Calculating EBITDA from the annual accounts

The building blocks of EBITDA

EBITDA is calculated starting from the company's operating result, as shown in the profit and loss account within the annual accounts filed with the National Bank of Belgium. Depreciation and amortisation charges, which reduce operating result but do not represent a cash outflow in the period, are then added back.

Interest income and expense, along with income tax, sit below operating result in the accounts and are already excluded from it, which is why EBITDA is described as earnings before interest and tax as well as before depreciation and amortisation.

Where to find the relevant figures in the filed accounts

The Belgian standardised format for annual accounts presents operating result as a specific line in the profit and loss account, and depreciation and amortisation charges are separately disclosed as an operating charge within the same section, making both figures identifiable without needing internal management accounts.

For companies filing under the abbreviated schema rather than the full schema, some of these lines may be aggregated differently, which can require closer reading of the notes to the accounts to isolate the depreciation and amortisation component specifically.

The statutory formula uses the figure as reported

For purposes of the statutory formula, EBITDA is taken directly from the filed accounts without adjustment for exceptional items, such as a one-off gain on a disposed asset, an unusually large bad debt provision, or a temporary cost related to a specific event during the year.

This means a company whose reported EBITDA was unusually low or high in the relevant year, for reasons unrelated to its ongoing operating performance, will see that distortion carried directly into the formula's result.

Normalisation within an independent valuation

An independent valuation report can adjust EBITDA to better reflect the company's recurring earning capacity, for instance by excluding a genuinely one-off item or restating a director's remuneration to a market-conform level, a process generally referred to as normalisation.

This normalised EBITDA then feeds into the valuation methods applied in the report, rather than into the statutory formula itself, which by design uses the figure as reported without adjustment.

Why the source figures matter

Because both the statutory formula and an independent valuation rely on figures traceable to the filed annual accounts, having those accounts complete, accurate and readily available is a practical precondition for either route to produce a reliable result.