ACCOUNTING GLOSSARY
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization
A common measure of operating earnings before financing, tax and non-cash charges.
What does EBITDA mean?
A common measure of operating earnings before financing, tax and non-cash charges. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
EBITDA in context
A company with $2 million operating earnings before these items reports $2 million EBITDA.
Why it matters in financing
EBITDA can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related accounting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.