Article · 10 min read

What Is EBITDA? Definition, Formula and Examples

Corporate Finance Institute · corporatefinanceinstitute.com Free Beginner

A complete EBITDA reference: both ways to calculate it, why analysts use it, its limits (it is not cash flow) and how the EV/EBITDA multiple is used in valuation.

  • EBITDA = net income + interest + taxes + depreciation + amortisation.
  • EBITDA ignores capital spending and changes in working capital, so it is not cash flow.
  • EV/EBITDA is the common multiple for valuing a business with stable operations.
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The question it answers

  1. What is EBITDA, and how do I calculate it?

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