Business, finance and operations
EBITDA
Earnings before interest, tax, depreciation and amortisation.
- Business, finance and operations
Definition
Earnings before interest, tax, depreciation and amortisation. It is operating profit with depreciation and amortisation added back, used as a rough guide to the profit generated by day-to-day operations.
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Why it matters
It strips out financing, tax and the cost of past investment, so it is often used to compare operating performance and in lending terms. It is not cash flow and ignores the cost of replacing assets.
Where it is used
Investor updates, lending covenants, valuations and board reports. Used by finance directors, FP&A analysts, investors, lenders and corporate finance teams.
How to calculate it
EBITDA = operating profit (EBIT) + depreciation + amortisation
Worked example
In Q3 2025 Raket Parts B.V. had revenue of €18,476,412 and operating costs of €16,156,965, including depreciation of €525,000. EBIT = €18,476,412 - €16,156,965 = €2,319,447. EBITDA = €2,319,447 + €525,000 = €2,844,447. Foreign exchange results are outside operating profit here and are left out.
Raket Parts B.V. is a fictional company created for Insyt.
Definitions vary. EBITDA is not defined by accounting standards. Many companies report an adjusted EBITDA that removes one-off or other items, and the list differs. Check how your organisation calculates it.