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EBITDA

Earnings before interest, tax, depreciation and amortisation.

Area
Accounting
Abbreviation
EBITDA
In this area
51 terms of 259

EBITDA strips out financing decisions, tax position and non-cash charges to approximate operating performance. It is widely used to compare businesses with different capital structures.

It is an approximation, not cash flow. It ignores working capital movements and the capital expenditure that depreciation stands in for, which is why a business can show healthy EBITDA and still run out of money.

How it is calculated

EBITDA = Operating profit + Depreciation + Amortisation

Add back non-cash charges to operating profit.

Related terms

Income Statement

A summary of revenue, costs and profit over a period.

Depreciation

Spreading the cost of a fixed asset across its useful life.

Contribution Margin

Revenue minus variable costs — what each sale contributes to fixed costs and profit.

Cash Flow Statement

A record of actual cash moving in and out, split by activity.

More in Accounting

Accounts Payable (AP) Accounts Receivable (AR) Accrual Accounting Accrued Expense Aging Report Bad Debt Provision Balance Sheet Bank Reconciliation

EBITDA is not just a definition here

Accounting runs on this vocabulary every day in AWRA OpsHub — 51 of our 259 glossary terms describe things the platform actually does.

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