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Accounting & Tax vocabulary · Financial Statements

EBITDA

Meaning in accounting & tax, with examples

/ˈiːbɪtdɑː/abbreviationCommon term

In accounting & tax, EBITDA means: Earnings before interest, taxes, depreciation and amortization: a measure of operating profit that leaves out financing costs, tax and non-cash asset costs.

In Turkish: FAVÖK, faiz, amortisman ve vergi öncesi kar

How it is used

Very common in management reports, loan covenants and company valuations, but it is not defined by IFRS. Analysts quote EBITDA margin and adjusted EBITDA. Usually said 'ee-bit-dah'.

Example sentences

  1. EBITDA rose 25 percent, but net income fell because of higher interest costs.

  2. The loan agreement requires net debt to stay below three times EBITDA.

Common collocations

  • EBITDA margin
  • adjusted EBITDA
  • net debt to EBITDA
  • net incomeThe profit left after all expenses, interest and taxes have been deducted from revenue for a period. If the result is negative, it is a net loss.
  • depreciationThe gradual spreading of the cost of a physical asset, such as a machine or vehicle, over the years it is used, recorded as an expense each period.
  • amortizationThe gradual spreading of the cost of an intangible asset, such as software, a licence or a patent, over its useful life, recorded as an expense.
  • gross profitRevenue minus the cost of goods sold, before operating expenses such as rent, salaries and marketing are deducted.
  • GAAPGenerally Accepted Accounting Principles: the set of accounting rules used in a particular country, most often meaning US GAAP, set by the FASB.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Financial Statements

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This page explains English vocabulary for learners. It is not financial advice.