Business & Sales

What Is EBITDA?

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It measures a company’s operating profitability before financing costs, taxes, and non-cash charges, and is often used to compare companies with different debt levels or asset bases.

Formula

EBITDA = net income + interest + taxes + depreciation + amortization. EBITDA margin = EBITDA ÷ revenue × 100.

Limitations

EBITDA is not a measure defined by standard accounting rules and ignores capital spending and debt costs, so it is usually considered alongside cash flow and net income.

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🔗 Related Terms

Depreciation Net Profit Margin Operating Expenses Income Statement

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.