EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the measure of operating profitability calculated by adding those items back to net income. It's used widely in valuation (EBITDA multiples for mature companies and PE transactions), debt analysis (debt-to-EBITDA ratios), and cross-company benchmarking, because it removes effects of capital structure and tax jurisdiction. EBITDA is most relevant at later-stage and physical-asset-heavy businesses, and less relevant at early-stage SaaS where contribution margin and unit economics matter more. It is the most-discussed financial metric at mature companies.
The calculation:
Method 1: Net Income + Interest + Taxes + Depreciation + Amortization
Method 2: Operating I...