What’s Ebitda? Bosses struggle with accounts – Daily Business

Business owners struggle to understand jargon and accounting terminology which can lead to costly mistakes, according to new research.

Among the many terms that business leaders found confusing were commonly used acronyms, with over two-fifths (41%) unsure of the meaning of Ebitda, or “earnings before interest, taxes, depreciation, and amortisation”.

Even 44% of business owners with more than 10 years of experience struggled to identify the term, according to the survey of 250 UK business owners conducted by Capital on Tap.

OPEX, or “operating expenses,” and CAPEX, meaning “capital expenditure,” were considered confusing for 39% and 37% of respondents.  

Dividends appear to cause the least confusion among business owners, with just over one in ten (11%) admitting to misunderstanding the terms.

More than half (52%) of respondents believe that misunderstanding the corporate terms has led to a missed business opportunity, and 29% say it has contributed towards reputational damage.  More than two-fifths (42%) reported financial loss, or budgeting errors, as a result of misunderstanding business terms.

Alex Miles, chief operating officer at Capital on Tap, advises anyone confused with accounting and other business language to ask for clarification.

“Phrases like ‘Let’s make sure we’re all using that term the same way’ help align everyone and avoid costly misunderstandings later,” he said.