What is EBITDA?
Why is it important?
1/ What does it stand for?
EBITDA is an acronym that stands for:
Earnings
Before
Interest
Taxes
Depreciation
Amortization
2/ Not a GAAP measure
EBITDA is not a number that you will typically see on a company’s financial statements
It’s a measure that companies calculate separately in a 10K filing or one that you could calculate yourself
3/ What does it mean?
You probably have a good idea of what “Profit” is
Profit is what is left over after deducing expenses from a
company’s revenue
EBITDA is an adjusted measure of profit
You can calculate it as follows:
1) Start with Net Profit
2) Add: Interest, Taxes, Depreciation, Amortization
3) The result is EBITDA