EBITDA
A widely used operating measure that excludes several real costs and is not the same as cash generated or available to investors.
EBITDA means earnings before interest, taxes, depreciation, and amortization. It may be derived from financial statements or reported as an adjusted non-GAAP measure. EBITDA is not operating cash flow, free cash flow, or a standardized measure across all companies.
Frequently Asked Questions
Is EBITDA a measure of cash flow?
No. It omits working-capital changes, capital expenditures, cash taxes, interest, leases, restructuring payments, and other cash uses. A company can report positive EBITDA while consuming cash.
What is adjusted EBITDA?
Adjusted EBITDA excludes additional items selected by management or analysts. Definitions vary, and recurring items labeled one-time can make comparisons misleading. Review the reconciliation and the frequency of exclusions.
Does depreciation not matter because it is noncash?
Depreciation is noncash in the current period, but it may represent consumption of assets that require maintenance or replacement spending. Ignoring capital intensity can overstate economic profitability.
What is a good EBITDA margin?
There is no universal percentage. Industry structure, asset intensity, lease accounting, growth stage, cyclicality, and adjustment policies differ. Compare consistent definitions and reconcile EBITDA to cash flow.