EBITDA
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a key measure of operating earnings used in business valuation.
EBITDA excludes financing costs, taxes, depreciation, and amortization, making it easier to compare operating earnings. It is not cash flow and does not account for capital expenditure requirements.
A detailed valuation examines whether nonrecurring or nonoperating items require adjustment. See Adjusted EBITDA.
Example
A business generates EUR 8.0 million in revenue. Materials of EUR 3.2 million, personnel costs of EUR 2.8 million, and other operating expenses of EUR 1.2 million leave EBITDA of EUR 0.8 million under these assumptions. The EBITDA margin is 10%.
Related terms
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a key measure of operating earnings used in business valuation.
Related terms