Knowing Your Numbers Beyond Tax: Part 6 - EBITDA For Small Business And Understanding The Balance Sheet
- Future Accounting
- 11 hours ago
- 2 min read
A practical financial guide for small and family businesses.
Written By: Melissa Cunliffe
When lenders, investors or potential buyers assess a business, they often focus on a metric called EBITDA.
EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation. It helps show the underlying profitability of the business before financing and accounting adjustments.
Understanding EBITDA for small business provides insight into how profitable the operations of the business really are.
In simple terms, EBITDA helps show the underlying operating profitability of a business before financing costs and accounting adjustments.
This number is often used when:
Valuing a business
Assessing borrowing capacity
Reviewing operational performance
For many small and family businesses, understanding EBITDA provides a clearer picture of the profit generated from the actual operations of the business.
But profitability is only part of the story.
Your balance sheet provides another important perspective.
While the profit and loss statement shows how the business has performed over time, the balance sheet shows what the business owns and owes at a particular point in time.
Assets may include:
Cash
Equipment
Inventory
Vehicles
Intellectual property
Goodwill
Liabilities may include:
Loans
Supplier balances
Tax obligations
Other debts
A strong balance sheet improves the resilience of a business.
It provides stability during uncertain periods and can strengthen your ability to access finance, invest in growth, or navigate economic changes.
Understanding both profitability and financial position helps ensure you are not simply running a business — you are building something valuable over time.
In the final article, we’ll look at how all these numbers come together.
Because the real value of financial information comes from how it helps you make better decisions.
A strong balance sheet improves the resilience of the business and provides stability during uncertain economic periods.
If you’d like a clearer understanding of your EBITDA, balance sheet strength, and what these numbers mean for the future of your business, let’s talk.
Book a meeting today to review your financial position and identify opportunities to improve profitability, resilience, and long-term value.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
