Which component is NOT included in the calculation of EBITDA?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This metric focuses on a company’s operational efficiency by excluding the effects of financing and accounting decisions.

In EBITDA calculations, interest expenses are not considered because they relate to how a company finances its operations rather than its operational performance. Interest is associated with the capital structure of the company and can vary widely between companies based on their financing strategies. This exclusion allows for a clearer comparison of operational performance across firms in the same industry, regardless of their financial arrangements.

In contrast, depreciation costs, which include tangible assets depreciation, and amortization expenses are included in the categories of expenses that are accounted for in EBITDA. These items relate to the systematic allocation of expenses over time, reflecting the wear and tear of physical assets and the gradual recognition of intangible assets respectively. Therefore, they are necessary in evaluating a company's operational statistics.