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
Earnings Before (you subtract) Interest, Taxes, and Amortized depreciation/expenses.
It is supposed to show you the baseline health of the business. If you have a solid EBITDA, and a lot of debt, for example, then you can usually safely assume that the business will be okay if you can shed the debt.
It’s kind of a core business measure. All of the things that are excluded are situational, and can be planned for/around. If EBITDA is good, but the business is not profitable, then fixing it is usually a matter of financial discipline and planning, rather than a flaw in the model itself.
Revenue = how much money is coming in from what you’re selling
Ebitda = how much money you are actually making from what you’re selling after accounting for the costs
Revenue = how much money is coming in from what you’re selling
Ebitda = how much money you are actually making from what you’re selling after accounting for the costs
Revenue = how much money is coming in from what you’re selling
Ebitda = how much money you are actually making from what you’re selling after accounting for the costs
Let’s assume you can borrow your dads car but have to pay for gas. Now some of your friends want to go with you somewhere and you want to know how much gas money you need to ask. It’s simple. It’s the cost of petrol decided by the amount of people. Let’s say 4 friends $5 each. You payed 10 for gas. This $10 is youre left with us your ebidta.
Now your dad doesn’t want to lend his car anymore. You saved some money and bought your own car. You’re still asking them each the $20. Because your cost is different, you want to have a different way of calculating wat it is a coating you.
Your revenue is $20 (what you ‘earned’)
Your ebidta is still $10.
But you have to pay for the car depreciation as well. Let’s say your car depreciated 5$ during that trip. This means that your profit is $10-5 = $5.
Let’s assume you can borrow your dads car but have to pay for gas. Now some of your friends want to go with you somewhere and you want to know how much gas money you need to ask. It’s simple. It’s the cost of petrol decided by the amount of people. Let’s say 4 friends $5 each. You payed 10 for gas. This $10 is youre left with us your ebidta.
Now your dad doesn’t want to lend his car anymore. You saved some money and bought your own car. You’re still asking them each the $20. Because your cost is different, you want to have a different way of calculating wat it is a coating you.
Your revenue is $20 (what you ‘earned’)
Your ebidta is still $10.
But you have to pay for the car depreciation as well. Let’s say your car depreciated 5$ during that trip. This means that your profit is $10-5 = $5.
Let’s assume you can borrow your dads car but have to pay for gas. Now some of your friends want to go with you somewhere and you want to know how much gas money you need to ask. It’s simple. It’s the cost of petrol decided by the amount of people. Let’s say 4 friends $5 each. You payed 10 for gas. This $10 is youre left with us your ebidta.
Now your dad doesn’t want to lend his car anymore. You saved some money and bought your own car. You’re still asking them each the $20. Because your cost is different, you want to have a different way of calculating wat it is a coating you.
Your revenue is $20 (what you ‘earned’)
Your ebidta is still $10.
But you have to pay for the car depreciation as well. Let’s say your car depreciated 5$ during that trip. This means that your profit is $10-5 = $5.
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