EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. It is a financial metric that measures profitability by excluding non-operating expenses and non-cash costs. Learn how to calculate EBITDA and EBITDA margin, and why they are important for business evaluation. EBITDA Formula The EBITDA formula is calculated by subtracting all expenses except interest, taxes, depreciation, and amortization from net income. Often the equation is calculated inversely by starting with net income and adding back the ITDA. Many companies use this measurement to calculate different aspects of their business. For instance, since it is a non-GAAP calculation, you can pick and choose what expenses are added back into net income. For example, it’s not uncommon for an ... EBITDA, or Earnings before Interest, Taxes, Depreciation, and Amortization, is a different measure of profitability than net income. EBITDA, which includes depreciation and amortization as well as taxes and debt service expenses, seeks to depict the cash profit created by the company's activities. The EBITDA full form in finance is Earnings Before Interest, Taxes, Depreciation, and Amortization. Considered as a financial metric, the use of EBITDA in the share market is to help investors gauge the financial performance before standard deductions, such as taxes, depreciation, etc. Therefore, in this blog, we will explore EBITDA meaning, including its formula, benefits, interpretation, and limitations.
