EBITDA is a financial measure used to understand a company’s operating performance. It focuses only on income and costs that come directly from running the business. By excluding interest, taxes, depreciation, and amortization, EBITDA removes items that can vary across companies due to financing choices, tax structures, or accounting methods.
Depreciation and amortization are non-cash expenses based on the gradual cost of assets over time. Removing them helps analysts focus on actual operating activity rather than accounting adjustments. Interest and taxes are excluded because they depend on financing decisions and local regulations — not on the company’s core operations.
EBITDA is often used when comparing companies in the same industry, especially when they have different levels of debt or different asset structures. While EBITDA is helpful for understanding operating performance, it is not a full measure of profitability. It does not include all costs and should be reviewed alongside other financial metrics.
EBITDA helps investors evaluate how efficiently a company runs its operations. It is useful for comparing companies, analyzing trends, and assessing a business’s ability to generate cash from its core activities.
Net income includes all expenses, such as interest, taxes, depreciation, amortization, and one-time items. EBITDA removes these costs to show a clearer view of operating performance. Net income tells you how much profit remains for shareholders, while EBITDA focuses on the strength of the business before financing and accounting decisions.
Companies in the same industry may have different debt levels, tax rates, or asset ages. EBITDA removes these differences and allows analysts to compare operating performance more directly. This makes it easier to see which companies run their business more efficiently.
EBITDA can give the impression of strong performance even when a company has high interest costs, large debt, or significant capital expenses. It also ignores cash needs for replacing equipment. This is why investors use EBITDA alongside other indicators like cash flow, net income, and debt levels.
A company reports $20 million in earnings from operations. After adding back interest, taxes, depreciation, and amortization, its EBITDA is $32 million. Analysts use this number to compare it with competitors and evaluate operating performance.
FinFeedAPI gives developers access to the raw financial fields required to calculate EBITDA accurately, including operating income, depreciation, amortization, and interest expenses. Instead of manually gathering these numbers from multiple sources, users can pull them directly from the SEC API and already cleaned and standardized.
