What is EBITDA?
Earnings before interest, taxes, depreciation and amortization.
How to calculate it
Calculate EBITDA as: Net income + Interest + Taxes + Depreciation + Amortization. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
Net income $100k + interest $20k + taxes $30k + D&A $50k = $200k EBITDA.
Example 2
Net income $150k plus $30k interest, $40k taxes and $60k depreciation and amortization -> $280k EBITDA, a clean comparison point against differently financed peers.
Why it matters
EBITDA approximates operating cash generation by stripping out interest, taxes, depreciation and amortization, making it useful for comparing companies with different capital structures. It is widely used in valuation and lending decisions. It is not a substitute for cash flow, since it ignores working capital and capital expenditure, and should not be treated as such.
Benchmark context
Judge the EBITDA margin against industry peers rather than the absolute figure; a rising margin indicates improving operating efficiency.
Common pitfalls
Treated as a substitute for cash flow when it isn't.
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