Ways to Interpret EBITDA

Ready to become an investing whiz 🤓?

Knowing how to interpret EBITDA in investing is essential!

💡EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.

It's a measure of a company's ability to generate cash by excluding non-cash items. 👍

Say you're deciding between investing in Amazon or Walmart. 🤔

Amazon's EBITDA was $44.3 billion while Walmart's was $21 billion.

This tells you that Amazon is generating more than twice as much cash as Walmart. 💰

Beyond using ETBIDA as a comparison to other companies, you can use EBITDA to compare a company's performance over time. 🕰️

For example, if Amazon's EBITDA went up significantly from one year to the next, it shows that the company generated more that year 📈

So, now you know you can use EBITDA to compare two companies or a company to itself! 🧠

Still, EBITDA is only one metric, so don’t forget to consider other factors like operating profit, risk ratings and so much more 🎉 Happy investing! 💸

Happy investing! 💸