📖 Business terms

EBITDA

Operating profit before interest, taxes, depreciation and amortisation.

Formula

EBITDA = Revenue − Operating costs (excluding D&A)

EBITDA strips out financing, tax and accounting items to show how much cash the core business generates.

It's the favourite number in M&A — companies are often valued as a multiple of EBITDA.

🧮 Example

A firm with ₹200 crore revenue and ₹160 crore operating costs has EBITDA of ₹40 crore. At 10×, it's worth ~₹400 crore.

🎯 Interview tip

Mention that EBITDA ignores capex — a capital-heavy business can have great EBITDA and little cash.

Used in

M&A casesConsulting cases

Learn next

M&A framework

Should we buy this company?

Profit

What's left after you pay for everything.

Working capital

The cash tied up in running the business day to day.

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