Your Ask Joey ™ Answer

What is an EBITDA bridge?

An EBITDA bridge is any easy way for investors or users of the financial statements to understand what financial line items drove year over year changes in EBITDA.

For example, if EBITDA was $500 in FY19 and increased to $800 in FY20, investors would want to know whether the increase was due to revenue growth, improved gross margin, or a decline in operating expenses. As the visual shows, revenue increased by $500, but was offset by a $300 increase in cost of goods sold. This resulted in additional gross profit of $200, with the remaining $100 increase in EBITDA due to a reduction operating expense.

If you are studying for the CPA exam, then sign up for a free trial to have full access to the Universal CPA platform for 7 days here. Universal CPA is the only course that has visual learning and bite-sized video explanations for every single MCQ and simulation.

To learn more about the Universal CPA course and see a demo of the course, visit this link.


Back To All Questions

You might also be interested in...

  • Three Reasons to Become an Accountant

    If you’re someone who is intrigued by numbers, enjoys problem-solving and wants to help others, then accounting might be the perfect career for you. While some people may be put off by its unalluring reputation, accounting is an excellent career choice that has many benefits. In this article, we look at three of the reasons...

  • Qualified Retirement Planning: Tax Advantages & Disadvantages

    Home Advantages and Disadvantages of Tax-Free and Deferred-Tax Retirement Plans What are “qualified retirement plans” and how can they be effective for tax planning? Well, there are plenty of tax savings advantages to individuals contributing to tax-free retirement accounts, as well as tax-deferred retirement accounts. However, this doesn’t necessarily mean that there are no disadvantages...

  • CPA Evolution Survival Guide

    Download Your eBook by selecting the download icon in the top right-hand corner