EBITDA
Quick answer
Operating profit before interest, taxes, depreciation and amortization - a measure of operating performance.
Key takeaways
- Gross margin (cost of goods sold)
- Operating costs (logistics, staff, errors)
- Avoidable penalties and losses
What EBITDA is
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is operating profit before interest, taxes, depreciation and amortization. It shows how much the core business generates, independent of financing and accounting policies.
Why it matters to the board
EBITDA is the preferred metric in valuations and cross-company comparisons because it removes capital-structure and depreciation effects. It's also a useful proxy for operating cash flow.
What influences EBITDA in operations
- Gross margin (cost of goods sold)
- Operating costs (logistics, staff, errors)
- Avoidable penalties and losses
How CRMconnect helps
CRMconnect is not accounting software, but it indirectly improves EBITDA by reducing avoidable operating costs: manual work, chargebacks, dead stock and retail penalties.
Real-world example
Cutting OTIF penalties from €18,000/month to under €2,000 and manual order-entry hours directly improved operating margin and, in turn, EBITDA.
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Frequently asked
Is EBITDA the same as net profit?+
No. Net profit is after interest, taxes and depreciation; EBITDA excludes them, to show pure operating performance.
Does CRMconnect do the accounting for EBITDA?+
No. CRMconnect is an operational layer, not accounting. It contributes to EBITDA by reducing operating costs, and clean data flows into the accounting ERP.
Where CRMconnect fits
Related terms
Profit and loss statement
Financial statement showing a company's revenues, expenses and result (profit/loss) over a period.
FinanceGross Margin
The difference between revenue and cost of goods sold, usually expressed as a percentage of revenue.
FinanceCash flow
The actual movement of money in and out of a company over a period - a measure of liquidity, not profit.
FinanceROI (Return on Investment)
The metric measuring the net gain of an investment relative to its cost: (benefit - cost) / cost.