EBITDA

What is EBITDA?

EBITDA strips out financing decisions (interest), tax jurisdictions, and non-cash charges (depreciation/amortization) to show the core operating performance of a business.

Why EBITDA is Used

EBITDA is commonly used to compare businesses across different tax regimes, capital structures, and accounting methods. It's also the primary metric used in business valuations and acquisitions.

Limitations

EBITDA ignores real costs (interest, taxes, capex). It can make unprofitable businesses look healthy. Always look at net profit and cash flow alongside EBITDA.