EBITDA

A measure of a business's core operational profitability before the effects of financing decisions, tax environments, and non-cash accounting entries.

EBITDA is widely used in business valuations and investment conversations because it strips out factors that vary between companies and jurisdictions, providing a clearer view of underlying operating performance.

A founder's business shows a modest net profit after debt interest and depreciation charges. However, her EBITDA is significantly higher, demonstrating to potential investors that her core operation is highly profitable before financing costs.