EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of a company’s operating performance. EBITDA is often used as a proxy for cash flow because it excludes accounting items that do not affect cash flow.
EBITDA is a measure of a company’s operating performance. It is often used as a proxy for cash flow because it excludes accounting items that do not affect cash flow.
EBITDA can be helpful in identifying trends in a company’s business operations. For example, if EBITDA is consistently increasing, it may be an indication that the company is becoming more efficient. Conversely, if EBITDA is declining, it may be an indication that the company is losing market share or becoming less efficient.
EBITDA is not a perfect measure of cash flow, however, because it excludes items such as interest expense and changes in working capital. Therefore, EBITDA should be used in conjunction with other measures of financial performance, such as cash flow from operating activities.