EBITDA is earnings before interest, taxes, depreciation, and amortization. It measures the operating profitability of a business independent of capital structure (interest), tax jurisdiction (taxes), and accounting choices about long-lived assets (depreciation and amortization). EBITDA is the single most common number used to compare businesses to peers and to value a business in a sale or financing.
EBITDA strips four items off the bottom of the income statement to isolate operating performance: interest expense (depends on how the business is financed), income taxes (depends on entity structure and jurisdiction), depreciation (non-cash allocation of historical capex), and amortization (non-cash allocation of intangible assets). What remains is a measure of the cash-generating capacity of the core operations. EBITDA is heavily used in M&A and lending because it allows comparison across businesses with different debt levels and asset bases. It is not a substitute for cash flow — EBITDA ignores working capital changes and ongoing capital reinvestment — but it is a useful operational profitability benchmark.
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization or: EBITDA = Operating Income + Depreciation + Amortization
EBITDA is the language of valuation. Most SMB acquisitions and bank loans are sized off a multiple of EBITDA. A $300K EBITDA business in a sector with 4× valuation multiples is worth roughly $1.2M; the same business at $500K EBITDA is worth $2M. Owners thinking about an eventual sale, refinancing, or partnership should manage EBITDA deliberately — because every dollar of sustainable EBITDA increase translates into multiple dollars of enterprise value. EBITDA also lets owners benchmark against peers across very different cost structures (owned vs leased facilities, financed vs cash-bought equipment).
Fynso calculates EBITDA monthly and trailing-twelve-month, surfacing both the absolute number and the trend. Adjustments common in valuation conversations (owner compensation normalization, one-time expenses, personal expenses run through the business) are surfaced separately so owners can see both reported and adjusted EBITDA at a glance. When EBITDA margin drifts below industry benchmark, the brief surfaces the specific cost lines driving the gap, so structural problems become actionable rather than hidden in a single summary number.
Professional services
An agency with $4M revenue and $700K of EBITDA (17.5% EBITDA margin) is at the high end for services. The same agency adjusting EBITDA for $150K of above-market owner compensation pushes adjusted EBITDA to $850K — a meaningful difference if the business is being valued for sale or for a partner buy-in.
Restaurant
A profitable single-location restaurant with $2M revenue might run $200K of EBITDA (10% margin). EBITDA matters more than net income here because depreciation on kitchen equipment and leasehold improvements suppresses net income — the cash-generating power of operations is more accurately captured by EBITDA.
SaaS
A bootstrapped sub-$5M SaaS often runs 15–30% EBITDA margin once growth investment stabilizes. Acquirers value SaaS off EBITDA multiples or revenue multiples; the higher the EBITDA margin, the more pricing power the business commands in both directions.
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