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Financial statements

EBITDA

Earnings before interest, tax, depreciation, and amortisation. Operating income with the non-cash depreciation and amortisation added back — a rough proxy for operating cash generation.

Owned by: AnalystTest band: Analyst
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The formula

EBITDA = Operating income + D&A

In practice

Lenders and buyers quote it constantly. It is not cash flow: it ignores capex, working capital, and the tax bill.

The kind of thing the test asks

  • Operating income $200k, depreciation $50k, interest $30k, tax $40k. EBITDA is…
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More in financial statements

The income statementThe balance sheetThe cash flow statementHow the three statements linkAccrual versus cash accountingGross margin

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