Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of operating earnings calculated by adding interest expense, income taxes, depreciation, and amortization back to net income. Used primarily for management-run or larger businesses where owner compensation is at or near market rate and does not require normalization. EBITDA serves as the base figure from which valuation multiples are applied in middle-market and lower-middle-market transactions. Distinct from SDE, which is the preferred earnings metric for owner-operated small businesses. (Also see Adjusted EBITDA, SDE, Valuation Multiple.)
Financial Analysis
EBITDA
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