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Ebitda for Dummies

noun


What does Ebitda really mean?

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Alright, so EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization." And I know that's a lot of big words all smushed together, but don't worry, I'm here to break it down for you. So, let's take it step by step.

First off, "earnings" simply means the money a company makes from its business activities. Then we've got "Before Interest, Taxes, Depreciation, and Amortization." Let's break that down even further.

Interest is the extra money you have to pay when you borrow money, like when you take out a loan. Taxes are the money that businesses have to pay to the government. Depreciation is the decrease in value of an asset over time, like how a car loses value as it gets older. And amortization is the paying off of debt in regular installments over time.

So when we put it all together, EBITDA is a way to measure a company's profit without factoring in certain expenses like interest, taxes, and the decrease in value of their assets. It gives us a clearer picture of how much money the company is making from its core business operations.

It's like when you're trying to figure out how much money you have in your piggy bank, but you decide to ignore the coins that someone gave you as a gift. The coins are nice to have, but they're not really part of your regular savings, just like how EBITDA helps us focus on the money a company is making from its main activities without getting distracted by other expenses.

So, in a nutshell, EBITDA tells us how much money a company is making before taking into account certain expenses. It's a way to get a clear picture of their core profitability. And that's EBITDA in a nutshell!

Revised and Fact checked by Olivia Davis on 2023-11-17 02:03:11

Ebitda In a sentece

Learn how to use Ebitda inside a sentece

  • A company's Ebitda increased by 10% this quarter, showing that they are making more profit.
  • The Ebitda of the business is used to measure its financial health and profitability.
  • The Ebitda margin is a useful metric for comparing the profitability of different companies.
  • Investors often look at a company's Ebitda to determine if it is a good investment.
  • By focusing on increasing Ebitda, a company can improve its overall financial performance.

Ebitda Synonyms

Words that can be interchanged for the original word in the same context.

Ebitda Hypernyms

Words that are more generic than the original word.