Skip to content
Pocket Invoice: Free Invoice makerFree Invoice Maker

Business glossary

EBITDA

Definition

Earnings before interest, taxes, depreciation and amortization.

Pocket Invoice Editorial Team · Updated

Example

With net income of $12,000, interest of $2,000, income tax expense of $3,000, depreciation of $1,500 and amortization of $500, this illustration gives EBITDA of $19,000.

How it differs from related terms

EBITDA removes selected expenses from an earnings measure. It is not cash flow and does not show capital spending, working-capital changes or debt principal repayments. Define adjustments when comparing EBITDA between businesses.

Frequently asked questions

What is an example of ebitda?

With net income of $12,000, interest of $2,000, income tax expense of $3,000, depreciation of $1,500 and amortization of $500, this illustration gives EBITDA of $19,000.

How should ebitda be interpreted?

EBITDA removes selected expenses from an earnings measure. It is not cash flow and does not show capital spending, working-capital changes or debt principal repayments. Define adjustments when comparing EBITDA between businesses.