EBITDA: what it is, formula and how to read it
EBITDA is a company's earnings before interest, taxes, depreciation and amortization. It shows how much the business itself earns, regardless of debt, taxes and how fast equipment is written off. It is handy for comparing companies, but it ignores equipment wear, so for capital-heavy companies it is read together with EBIT.
Formula
EBIT = revenue − cost of sales − operating expenses
EBITDA margin = EBITDA ÷ revenue × 100%
How to read it
- A measure of the business itself. It does not depend on debt, taxes or how equipment is depreciated, so it is handy for comparing companies.
- Read it together with EBIT. The gap between them is depreciation. For factories, telecoms and carmakers it is large, and worn-out equipment still has to be paid for in cash.
- Growing faster than revenue is a good sign. That is operating leverage: each new dollar of sales brings in more profit than the last.
Live exampletrailing 12 months · data as of Nov 5, 2026
The bigger the gap between the columns, the more a company spends on equipment wear. A company without its own factories keeps them almost equal, a manufacturer does not.
Rows in the terminal
EBITDA Margin (TTM) — EBITDA margin
The same, but without subtracting depreciation. For a capital-heavy company the gap with EBIT is large, and relying on EBITDA alone is dangerous: the wear of equipment still has to be paid for in cash.
EBITDA Growth (YoY) — EBITDA growth over the year
Earnings before interest, taxes, depreciation and amortization, year over year. Growing faster than sales — operating leverage is working, and the company earns more on every new dollar of sales than before.
Frequently asked questions
Why is EBITDA criticized?
It ignores equipment wear and the spending on it. A company with high EBITDA can still have no free cash if everything goes into replacing machinery.
What EBITDA margin is good?
There is no single norm. 30–60% is common for software and chips, 5–15% for retail and carmakers. Compare with companies in the same sector.
Related terms
All 109 metrics for every stock, compared with its sector — in the terminal
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