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
If you run a lemonade stand and it costs you $5 for the ingredients, that’s your material cost. If you hire someone for 2 hours running the stand and you pay them $20 for their labour (time) then your total cost is $25.
If you sell 35 glasses of lemonade for $1 each and make $35, that’s your revenue. Subtracting your cost ($25) gives you EBITDA of $10 or 28% of sales ($10 divided by $35).
Revenue tells you how “big” the business is. EBITDA tells you how profitable or efficient the business is. You can’t just look at one but need to consider both.
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