Accounting
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EBITDA

Earnings before interest, taxes, depreciation and amortization — a proxy for core operating cash generation.

Formula

EBITDA=NI+Interest+Taxes+Depreciation+AmortizationEBITDA = NI + Interest + Taxes + Depreciation + Amortization

Variables

NINet income
InterestInterest expense
TaxesTax expense
DepreciationNon-cash asset expense
AmortizationNon-cash intangible expense

Example

NI $70k + $10k int + $20k tax + $15k D + $5k A = $120k

Did You Know?

Critics call EBITDA “earnings before the bad stuff” because it ignores real costs like interest and asset wear.

ebitdavaluationcash flow