EBIDA is one of the family of earnings metrics which give the analyst, investor, or accountant an opportunity to view earnings, which is synonymous with net income, with a few factors added back into it.
In this case, interest payments on debt, depreciation of hard assets on the standard IRS schedules, and amortization of principal debts are all added back into the earnings of the company for the current period. Not to be confused with EBITDA, its more popular counterpart.
By adding interest, depreciation, and amortization to the earnings (net income) of a company, an analysis can be made of some of the internal choices which affect the cash flow of the business. Taxes, which are added back into earnings for EBITDA, but not EBIDA, are left alone because this analysis assumes that the company’s tax obligation cannot serve a useful purpose in reevaluating internal cash flows.
Consider that interest, depreciation, and amortization amounts can all be modified if a company refinances a loan or exchanges some hard assets for new hard assets. The aim of this measure is to see just how much cash flow is on-hand that could potentially be reallocated to paying down debt faster or another use.
EBIDA is not a GAAP method, which gives companies significant leeway when calculating these numbers.