Finance and accounting
EBITDA
Earnings before interest, taxes, depreciation and amortization.
Facts checked against sources onWhat does EBITDA mean?
EBITDA is operating profit (EBIT) with depreciation and amortization added back. It is popular for comparing companies with different debt, tax and asset histories, and for valuation multiples such as EV/EBITDA. It is not a measure defined by the main accounting standards, and it ignores the cash a business must spend on capex and working capital, so it is not the same as cash flow.
Where does it come up in case interview prep?
- The profit and loss statement, line by lineLesson in Business basics for non-business learners
- How the three statements link: one company through all threeLesson in Reading a business through its numbers: the three statements, cash and value
- EBITDA versus operating profit versus free cash flowLesson in Reading a business through its numbers: the three statements, cash and value
- Valuation in practice: multiples, a simple DCF, NPV, IRR and paybackLesson in Reading a business through its numbers: the three statements, cash and value
- Reading a real results release: Inditex, FY2025Lesson in Reading a business through its numbers: the three statements, cash and value
- Using this in a case: what to ask, what to calculate, what to sayLesson in Reading a business through its numbers: the three statements, cash and value
- Profit and lossLesson
- Mergers, acquisitions, and due diligenceLesson
Related terms
- EBIT and operating profitProfit from operations, before interest and tax.
- Depreciation and amortizationSpreading the cost of a long-lived asset over its useful life.
- Enterprise value (EV) and EV/EBITDAThe value of the whole business, to lenders and owners together.
- Free cash flowCash from operations minus capital expenditure.
- ProfitThe money left over after costs. Revenue minus cost.
- RevenueMoney earned from sales, before costs.
- CostWhat it takes to make and sell the product in a period.
- Fixed costA cost that stays the same when volume changes, within a normal range.
Learn it in context
See EBITDA at work in a lesson from Business basics for non-business learners, with checks as you go.
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