EBITDA

Definition

Banks use it to judge borrowing capacity: the ratio of net debt to EBITDA says in how many years a business could repay its debt out of operations. In a credit discussion it is therefore often the first figure on the table.

As a management figure it has a weakness: it hides the fact that assets have to be replaced. A business with high EBITDA and an old machine park is not as strong as the number looks.

What the software must be able to do

As with EBIT: what matters is a freely structurable income statement. Whoever talks to banks regularly should set the report up once rather than calculate it every time.

Checked Aug 2026

More terms under Bookkeeping and retention: Accrual principle Accrued liabilities Annual accounts Association accounting Balance sheet Balance sheet total Book value Break-even point Business assets Business expenses Cash book Cash flow statement Cash receipts Contribution margin Cost centre Current assets Debit and credit Depreciation Double-entry bookkeeping Duty to keep accounts EBIT Equity Equity ratio Financial year Fixed assets Fixed costs Foreign currency General ledger Gross profit Hidden reserves Income statement Inventory count Journal Journal entry Liabilities Liquidity Loss carry-forward Membership dues Net profit Opening balance sheet Overheads Pass-through item Prepaid expenses Provision Record-keeping ordinance Reserves Retained profit Simple accounts Swiss SME chart of accounts Tamper resistance Turnover Value adjustment Variable costs Volunteer-run structure Voucher Year-end closing modules