EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)

EBITDA is a profitability metric that measures a company's operating performance before accounting for non-operating expenses like interest, taxes, depreciation, and amortization. It’s widely used in financial analysis and business valuation because it reflects the core profitability of a business's operations.

Formula:

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

By excluding non-cash and non-operating expenses, EBITDA offers a clearer view of operational efficiency and cash-generating capability, making it a favored benchmark in comparing companies across industries, especially in capital-intensive sectors.