CAGR vs EBITDA
CAGR (Compound Annual Growth Rate) and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) both come up in business conversations and get confused. Here's the plain-English difference, side by side, so you can use each one with confidence.
The key difference: CAGR refers to compound annual growth rate, while EBITDA refers to earnings before interest, taxes, depreciation, and amortization — they describe different things even when they show up in the same sentence.
CAGR — Compound Annual Growth Rate
The mean annual growth rate of an investment over a specified time period longer than one year.
EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization
A measure of a company's operating performance and profitability before non-operating expenses.
When to use CAGR
Reach for "CAGR" when the conversation is specifically about compound annual growth rate. The mean annual growth rate of an investment over a specified time period longer than one year.
When to use EBITDA
Reach for "EBITDA" when the conversation is specifically about earnings before interest, taxes, depreciation, and amortization. A measure of a company's operating performance and profitability before non-operating expenses.
FAQs
What is the difference between CAGR and EBITDA?
CAGR stands for Compound Annual Growth Rate — The mean annual growth rate of an investment over a specified time period longer than one year. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization — A measure of a company's operating performance and profitability before non-operating expenses.
Are CAGR and EBITDA the same thing?
No. They're often used in the same conversation because they're related, but they describe different concepts. CAGR = Compound Annual Growth Rate. EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization.
When should I use CAGR vs EBITDA?
Use CAGR when you're specifically referring to compound annual growth rate. Use EBITDA when the topic is earnings before interest, taxes, depreciation, and amortization.