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PRATHAM
Experimenting On lea... • 1y
📢 WTF is EBITDA ❓🤔 EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization ( Amortization in simple words is like repayment of installment/loans). It’s like looking at how much money a company makes from its core business operations before subtracting the costs of " loans, taxes, and the gradual reduction in value of its assets like equipment and patents , etc " 🤯 🧐 An example to illustrate EBITDA: Imagine a lemonade stand that made $100 last year by selling lemonade. To make the lemonade, they had to buy lemons, sugar, and pay for a stand, which all cost $50. So, the stand’s profit before anything else is $50. So, $50 is EBITDA . Now, let’s assume that the lemonade stand borrowed $10 to buy a juicer and has to pay $2 as interest. It also needs to pay $10 in taxes. But these aren't included in EBITDA and so many startups are EBITDA positive but negative in net profit.
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