EBITDA is a metric used to measure the operating performance of a company. In some cases, it is used as an alternative to gross profit or net income because it shows a clear picture of a company’s earnings without factoring in taxes or other accounting-related estimates.
EBITDA represents profit before:
EBITDA helps compare profitability between companies and industries by eliminating the impacts of financial, accounting, and governmental factors. It gives a clear picture of a company's income.
EBITDA is calculated by taking Total Revenue and subtracting Costs of Goods Sold, Selling, General & Administrative Expenses, Other Operating Expenses, and then adding Depreciation & Amortization.
If a company is classified as Insurance or Bank, EBITDA will not be available due to its calculation methodology. These companies will not have Costs of Goods Sold, Selling, and General & Administrative Expenses, which are needed in the calculation.