The metric that tells investors how profitable your operations really are.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It strips out financing decisions, tax strategies, and accounting methods to show how profitable your core business operations are.
Formula: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
EBITDA is the most common metric used to value businesses, especially in M&A and fundraising. Investors use it because it normalizes for differences in capital structure, tax jurisdictions, and asset depreciation — making it easier to compare companies.
For business owners, EBITDA answers: “How much cash does my business generate from operations?” It's not a perfect measure (it ignores capital expenditures and working capital changes), but it's the standard benchmark.
EBITDA margin (EBITDA ÷ Revenue) tells you what percentage of revenue translates into operational earnings. A 20% EBITDA margin means $0.20 of every dollar earned is operational profit.
CentSight calculates your EBITDA in real time from your QuickBooks data. Track it monthly, compare to industry benchmarks, and model scenarios: “What would our EBITDA be if we cut $20K in monthly expenses?”