3 Jul 2018, 11:29 — 1 min read
Definition: EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation.
Example: EBITDA is an indicator of financial performance and is often used as a substitute for a company’s earning potential.
Formula: EBITDA = Net Profit + Interest +Taxes + Depreciation + Amortisation
Business insight: EBITDA is often used to measure how young companies or companies that have recently been restructured are doing financially. Its importance lies in how it indicates a company’s financial performance while excluding non-operational factors like interest and taxes.
EBITDA is a determinant of the value of a business. It is a good marker for comparing companies within an industry or even more generally. For companies that require big investments initially to grow, EBITDA can help measure current business performance.
Posted byGlobalLinker Staff
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14 Sep 2021, 11:07