Finance & Metrics
EBITDA
Definition: Earnings before interest, taxes, depreciation, and amortization; a cash-flow proxy for operations.
Restaurant investors use EBITDA to compare locations before capital structure differences. It adds back non-cash depreciation and financing costs to approximate operating cash generation.
Heavy equipment depreciation from new builds affects net income more than EBITDA. Lease structures (operating vs. finance) also change comparability.
EBITDA does not replace cash planning for debt service and working capital needs.
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