EBITDA
Earnings before interest, taxes, depreciation, and amortization - a measure of a business's core operating profitability, excluding financing and accounting decisions.
By stripping out interest, taxes, and non-cash charges like depreciation and amortization, EBITDA is meant to show how profitable the core business is on an operating basis, making it easier to compare businesses with different debt loads or accounting methods.
Lenders, particularly for larger loans and business acquisitions, often use EBITDA as the basis for cash flow coverage calculations, since it approximates the cash available to service debt before financing costs are applied.
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