A company reports Revenue from Operations of Rs. 1,000 crore, Operating Expenses (raw materials, employee costs, other direct expenses) of Rs. 680 crore, Non-operating Other Income of Rs. 30 crore, Depreciation and Amortization of Rs. 70 crore, Finance Interest Cost of Rs. 50 crore, and Tax Expense of Rs. 60 crore. What are the company's operating EBITDA and EBIT?

[ A ]EBITDA = Rs. 350 crore; EBIT = Rs. 300 crore

[ B ]EBITDA = Rs. 200 crore; EBIT = Rs. 140 crore

[ C ]EBITDA = Rs. 400 crore; EBIT = Rs. 180 crore

[ D ]EBITDA = Rs. 320 crore; EBIT = Rs. 250 crore[ CORRECT ]

Takeaway

Option D is correct: EBITDA = Rs. 320 crore; EBIT = Rs. 250 crore

Derivation

Operating EBITDA and EBIT reflect pure core operational performance before capital structure, asset financing, and non-operating income: Operating EBITDA = Revenue from Operations - Operating Expenses = Rs. 1,000 crore - Rs. 680 crore = Rs. 320 crore. (Non-operating other income of Rs. 30 cr is excluded from core operating EBITDA). Operating EBIT = Operating EBITDA - Depreciation & Amortization = Rs. 320 crore - Rs. 70 crore = Rs. 250 crore. This tests multi-step operating profit derivations. The common mistake is adding non-operating treasury income into core operating EBITDA.

Why the others fail

A — EBITDA = Rs. 350 crore; EBIT = Rs. 300 crore

EBITDA of Rs. 350 crore incorrectly adds non-operating other income (Rs. 30 cr) into core operational EBITDA.

B — EBITDA = Rs. 200 crore; EBIT = Rs. 140 crore

EBITDA of Rs. 200 crore results from mistakenly deducting depreciation and finance costs before calculating EBITDA.

C — EBITDA = Rs. 400 crore; EBIT = Rs. 180 crore

Rs. 400 crore is an arbitrary calculation that fails to subtract the required operating expenses and depreciation.