EBITDA: The Raw Power of Your Business Model
Nov 22, 2025EBITDA is useful because it strips away financing and accounting choices to show operating earnings before heavy adjustments.
Use EBITDA to compare operating power, then check what it leaves out.
The move
EBITDA removes interest, taxes, depreciation, and amortization to approximate operating profit before accounting and financing layers.
That makes it useful for comparing businesses with different capital structures.
The warning
EBITDA ignores capex, working capital, and real cash needs. A business can show attractive EBITDA and still consume cash.
This is why EBITDA is loved in decks and dangerous in isolation.
Use it
Use EBITDA to understand operating power. Then reconcile it to operating cashflow and free cashflow before making a real judgment.
Company strategy, founder logic, finance, and operating moves in short case notes.