📈 EBITDA

What it is: Earnings Before Interest, Taxes, Depreciation, and Amortization. This is the most widely used measure of a company's operating profitability — essentially, how much cash profit the business generates from its core operations, ignoring financing and accounting effects.

EBITDA is the single most important number for business valuation. Buyers and investors use it to compare companies across different tax situations, debt structures, and accounting policies.

How to calculate it:

Or alternatively: Operating Income + Depreciation & Amortization

Where to find it:

• Bookkeeping software: Many tools (QuickBooks, Xero) can generate an EBITDA report, or you can calculate it from the P&L
• Accountant-prepared statements: Often shown as a sub-total on the Income Statement; if not shown explicitly, calculate it using the formula above
• Your accountant: Simply ask "What was our EBITDA for 2024?" — they will know

Example: Your business had: Net Income $100K + Interest Expense $15K + Taxes $20K + Depreciation $25K = EBITDA $160K