What is EBITDA?

EBITDA is one of the most important metrics used by investors and analysts to evaluate a company. Banks use EBITDA to decide whether your business qualifies for a loan. It’s a quick way for you to assess the operational cash flow of your business.

Knowing your company’s EBITDA helps you better understand your cash flow and how your company looks to lenders or investors.

I’ll explain what EBITDA stands for and how to calculate it. I show a sample income statement and how EBITDA is calculated from it.

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