EBITDA
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of operating profitability before non-operating and non-cash charges.
Concept map
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Definition
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of operating profitability before non-operating and non-cash charges.
Use case
Used in accounting workflows, analysis, and technical interviews.
Judgment check
Useful only when the assumptions and inputs behind the metric are understood.
Deep dive
How to think about EBITDA
EBITDA = Revenue - Operating Expenses (excluding D&A). It's used to compare profitability across companies with different capital structures, tax jurisdictions, and asset bases. Critics note it ignores capital intensity (CapEx requirements) and working capital needs. Warren Buffett famously called it 'bulls--- earnings.'
Example: Company reports: Revenue $500M, COGS $300M, OpEx $100M (including $20M D&A). EBITDA = $500M - $300M - ($100M - $20M) = $120M. The $20M depreciation is added back to operating income of $100M.