Asked by Colby Nuccio on Jun 10, 2024
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EBITDA removes a significant fixed and noncash cost from the operating income number and may approximate the contribution margin.
EBITDA
An acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization, indicating a company's financial performance by measuring its profitability without considering financial, accounting, and tax effects.
Operating Income
The income generated from a company's primary business activities, before subtracting any interest and tax expenses.
Contribution Margin
The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.
- Appreciate the role of EBITDA within the framework of internal decision-making.
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Learning Objectives
- Appreciate the role of EBITDA within the framework of internal decision-making.
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