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Definition: EBITDA

EBITDA is an acronym for Earnings before Interest, Tax, Depreciation and Amortization. It is equal to Revenue minus all operating expenses other than depreciation, interest and taxes. It is a proxy for operating cash flow but with an exception of depreciation and amortization. It may include other non-cash revenues and expenses but it is basically seen as a fund source to pay out interest, dividend and tax.

It can be calculated in 2 ways:

  1. Revenue – Expenses (other than interest, depreciation, amortization and tax)
  2. PAT/(1-T) + interest +depreciation + amortization

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