In true eli5 way, please can someone explain the difference between Revenu and EBITDA, and, when you would want to use/assess one rather than the other.
In: 107
Revenue is the total amount of money the company brings in. If I sell 100 widgets for $10 each, my revenue is $1000. It’s just a raw measurement of total sales.
EBITDA speaks to profitability, or how much money you actually made on that $1000. If it cost you $900 in labour and material to sell $1000 in widgets, your actual profit was only $100 and your EBITDA (profitability) was 10%. This is subject to some other things like taxes.
Revenue in a vacuum doesn’t actually tell you very much. A company can have an ‘impressive’ revenue in the millions or billions but still be losing money and running in the red.
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