Bookkeeping & Reporting

EBITDA

EBITDA is earnings before interest, taxes, depreciation, and amortization.

Quick answer

EBITDA is earnings before interest, taxes, depreciation, and amortization.

It matters because buyers, lenders, and operators sometimes use it as a rough measure of operating performance, even though it is not the same as cash flow.

A lender may review EBITDA when evaluating the strength of a business before financing.

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Plain-English Definition

What EBITDA means

EBITDA is earnings before interest, taxes, depreciation, and amortization.

Why it matters It matters because buyers, lenders, and operators sometimes use it as a rough measure of operating performance, even though it is not the same as cash flow.
Simple example A lender may review EBITDA when evaluating the strength of a business before financing.
Related Questions

Questions people ask about EBITDA

What does EBITDA mean?

EBITDA is earnings before interest, taxes, depreciation, and amortization.

Why does EBITDA matter?

It matters because buyers, lenders, and operators sometimes use it as a rough measure of operating performance, even though it is not the same as cash flow.

What is a simple example of EBITDA?

A lender may review EBITDA when evaluating the strength of a business before financing.

When should I ask a CPA about EBITDA?

Ask a CPA when the term changes how your books are kept, how reports are read, or how tax numbers are produced from accounting records.

How is EBITDA different from Operating Cash Flow?

EBITDA means EBITDA is earnings before interest, taxes, depreciation, and amortization. Operating Cash Flow means Operating cash flow is the cash generated or consumed by ordinary business operations over a period. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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