This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Calculation: Sales less all cash expenses except Finance Charges and Income Tax (and Adjustments).
EBITDA is the amount of Profit available after deducting from Sales the cash expenses associated with the operations of the company (Cost of Sales, SG&A but not Deprecation), and before paying finance charges and taxes.
EBITDA is used to evaluate a company's operating performance without factoring in financing decisions, accounting practices, or tax environments.
EBITDA does not include the non-cash expenses such as Depreciation and Amortization.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.