Glossary

EBIDTA

Definition:

EBIDTA is an acronym that stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a measure of corporate profitability that represents cash profit generated by company operations.


What is EBITDA in simple terms?

EBITDA is your company’s net income (earnings) with interest, taxes, depreciation, and amortization added back in.


What is a good EBITDA?

Since EBITDA measures a company’s profitability, higher is generally better. You’ll want to do research on what a realistic and ideal EBITDA is for companies in your industry vertical.


Is a 20% EBITDA good?

Some companies calculate their EBITDA margin for a more realistic picture of their business' profitability. To determine the margin, divide your EBIDTA by total revenue. An EBIDTA margin over 10% is considered good.


Is EBITDA the same as gross profit?

EBITDA and gross profit are financial metrics that illustrate a company’s profitability by removing different items or costs. However, they measure profitability differently.
You calculate a company’s gross profit by subtracting the costs associated with making or providing its products and services from a company’s income.

Both gross profit and EBITDA are financial metrics that measure a company's profitability by removing different items or costs.


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