Ebitda and MOL are financial indicators used to assess a company’s profitability. These tools are critical when estimating a company’s value, analyzing its financial statements, or evaluating its ability to repay loans.

While Ebitda and MOL are often used interchangeably, there is a significant difference between them: one of these indicators excludes company provisions, which can be a decisive factor in evaluating a company’s ability to handle taxes, expenses, and future financial obligations.

Ebitda: What Is It?

Ebitda is a profitability indicator used to evaluate a company’s operating performance. Its meaning is embedded in its acronym: Earnings Before Interest, Taxes, Depreciation, and Amortization. In simple terms, it represents a company’s operating profit before accounting for provisions, providing a clear view of operational efficiency.

Ebitda is a key metric in corporate finance, offering a precise measure of the value created by a company after deducting production costs. This makes it an essential tool for assessing a company’s financial health.

Ebitda: How to Calculate It

There are several methods to calculate Ebitda. A common approach involves analyzing the income statement, subtracting production costs, amortization, and depreciation from the production value. The formula is:
Ebitda = Production Value - External Costs - Personnel Costs - Depreciation and Amortization

Alternatively, a bottom-up approach starts from net income:
Ebitda = Net Income + Taxes + Interest + Depreciation and Amortization

This calculation offers a detailed understanding of profitability by focusing on operational management, providing a more accurate picture than simply analyzing revenue or profit.

Ebitda vs. MOL: Key Differences

Although often used synonymously, Ebitda and MOL (Gross Operating Margin) are not the same. Both lack a universally recognized definition under OIC or IASB, but their main distinction lies in the inclusion of provisions and amortizations.

MOL focuses exclusively on a company’s operational management, reflecting revenue net of operating costs but excluding provisions, interest, and amortization.

Ebitda, on the other hand, offers a more cautious cash flow estimate, incorporating provisions and depreciations into the calculation.

Example Calculation:
Here’s an example based on a small company’s income statement:

 

Production value	150.000
- External Costs (services, feedstocks, etc.)	- 55.000
- personnel costs	- 85.000
MOL	= 10.000
- Provisions	- 3.500
- Credit Depreciation	- 1.800
Ebitda	= 4.700

 

When to Use Ebitda and MOL

Given their differences, Ebitda and MOL serve as complementary tools for analyzing a company’s financial and economic management.

• MOL is ideal for comparing companies in the same sector or for quickly estimating a company’s value. However, since it doesn’t account for changes in working capital, it may overestimate cash availability.
• Ebitda is preferable for evaluating a company’s ability to repay loans, as it includes provisions, offering a more realistic picture of financial availability after accounting for medium- to long-term commitments.

How to Obtain Ebitda and MOL for a Business

MOL and Ebitda are classified as financial equilibrium indicators. Unlike general figures such as revenue or profit, these indicators provide a detailed picture of a business’s profitability by considering operational management and costs.

These indicators are not included in standard financial statements obtained from a Chamber of Commerce report. Calculating them requires a reclassification of the income statement.

However, APIs make accessing such data much simpler in real-time. With Openapi’s Full Company web service, you can obtain over 1,300 data points on any Italian company, including MOL and Ebitda, simply by entering a VAT number. Similarly, the Company FR Advanced service provides key data for French companies, such as Siret codes and Ebitda figures.