EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a proxy for operating cash flow that strips out financing and accounting decisions. It allows cleaner comparison across companies with different capital structures, tax jurisdictions, and asset bases. EBITDA multiples (Enterprise Value / EBITDA) are standard valuation metrics in M&A — typical SaaS deals trade at 5-15× EBITDA; mature businesses at 3-8×. Critics (notably Warren Buffett) argue EBITDA ignores real costs (depreciation = future capex requirements). Use EBITDA alongside net income and free cash flow, not as a replacement.
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EBITDA
August 22, 2026 · Aditya Gupta
Investing
Related terms
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