Corporate FinanceFinancial Glossary
EBITDA
Definition
Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of a company's operating profitability that strips out the effects of financing decisions, accounting methods, and tax environments. Calculated as Revenue minus Operating Expenses (excluding interest, tax, depreciation, and amortization).
Why It Matters
EBITDA allows you to compare the operational efficiency of companies across different industries, capital structures, and tax jurisdictions. An EV/EBITDA ratio below 10 is generally considered good value in Indian markets. However, EBITDA can overstate cash profitability for capital-intensive companies with large depreciation charges.