Groundlearn / Glossary / EBITDA
EBITDA
A CFA term, defined in plain English with the distinction examiners test.
What it means
Earnings before interest, tax, depreciation and amortisation — a rough proxy for operating cash generation.
The exam angle
Ignores capital intensity and working capital entirely. Two firms with identical EBITDA and very different capex are not comparable.
Where it appears in the syllabus
- Financial Statement AnalysisCFA Level I · exam weight 11–14% · The three statements, inventories, long-lived assets, quality of earnings.
- EquitiesCFA Level I · exam weight 11–14% · Market organisation, indexes, industry analysis, dividend models.
Related terms
- Book valueThe accounting value of equity: assets less liabilities as reported.
- Earnings per shareNet income available to common shareholders, divided by the weighted average shares outstanding.
- Free cash flowCash available after the investment needed to maintain the business.
- Return on equityNet income as a percentage of average shareholders’ equity.
- Accrual accountingRecognising revenue when it is earned and expenses when they are incurred, regardless of when cash moves.
- Balance sheetA statement of what a company owns and owes at a single point in time.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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