EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric that measures a company’s operating performance, by excluding the impact of non-operating expenses such as interest expenses, taxes, depreciation, and amortization.
The formula to calculate EBITDA is:
EBITDA = Revenue – Operating Expenses (excluding Depreciation and Amortization)
- Revenue is the total amount of money a company generates from its sales
- Operating Expenses are all the expenses incurred in the day-to-day running of a business, excluding Depreciation and Amortization.