EBITDA measures operating profitability before interest, tax, depreciation and amortization. Learn how EBITDA decomposes in a KPI tree.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) approximates cash operating profit by stripping out financing and non-cash accounting items. EBITDA = Revenue − COGS − Operating Expenses + D&A. In a financial KPI tree, EBITDA is a common root for mature businesses and decomposes into revenue drivers on one side and cost structure (COGS %, OpEx %, headcount cost) on the other.