This workout asks us to calculate EBIT and EBITDA for the two most recent years We've been provided an income statement and underneath that a selection of footnotes You may want to pause the recording at this point and have a go yourself So my starting point is going to be to find operating profit and I can see an item that looks very similar, operating income. In year 3 this is 291,234 I then look above this to see if there are any obvious items that I should be adding back So maybe some non-recurring items? And I can see restructuring charges, 24,400 in year 3 So I've already started my answer And we've got operating income as reported and I've added back the restructuring charges I now look into the footnotes to see if there are any questionable items in here I look at the first paragraph, property plant and equipment It said it had a carrying amount of 11.6 but it was written down to a fair value of 0.6 Resulting in total impairment charges of 11.1 Great! That's my first item, I'm tempted to add back the 11.1 of impairment charges But hang on, there is an opportunity for me here to get something wrong Let's keep reading through the next paragraph and see what happens It says, of the 11.1 million impairment expenses 5.1, 1.9 and 0.7 were recorded in SG&A. That's fine. And 3.4 million was recorded in restructuring charges So that 3.4 million, I have already added that back in my calculation towards EBIT I've already put the restructuring charges of 24.4 million or 24,400 It I were to put the 11.1 million in again That 11.1 includes the 3.4, the restructuring charges includes the 3.4 I would be double adding back to 3.4 million, clearly an error So I need to take the 11.1 million and I need to strip out the 3.4 million Because I've already added it back, so in our sub calculation, we start with the PP&E impairment of 11.1 For the period it's 9.3. That's just in another paragraph down And I'm going to take the 3.4 and I'm going to subtract that off. In the next period there wasn't any So my PP&E impairment adjusted is just 7.7 So they are the figures that I need to include in my calculation further up here in getting towards EBIT Great, so operating income as reported, add back the 24.4 rrestructuring charges remember that includes the 3.4 impairments And now take your PP&E impairments, not quite the 11.1, it's now only 7.7 Were there any other items that wed needed to add back? Well if we looked at the third paragraph, this just refers to the impairment for year 2 and that was total impairment charges where 9.3 million for fiscal year 2. We've already done that In the final paragraph, it says they have a trade name and unfortunately that trade name was written down to its implied fair value resulting in an impairment charge of 9.1 million So that's an certain extra line item we need to include, there's the 9.1 If I add all of those line items together, I will get to EBIT So I take the 291,234, add back the expenses that shouldn't have been there to eventually get to EBIT Last up, we need to get to EBITDA. I can see depreciation and amortization have been provided to us So we'll just add them in as well Add everything up, EBIT plus depreciation plus amortisation gets me now to EBITDA