What does EBITDA mean? EBITDA Explained

What does EBITDA mean? EBITDA Explained

EBITDA stands for:

Depreciation, and

It is a financial metric that measures a company's profitability, excluding certain expenses such as interest, taxes, depreciation, and amortisation.

These expenses can vary significantly from one company to another and can be influenced by factors such as the company's tax rate and the way it accounts for depreciation and amortisation. By excluding these items, EBITDA provides a more consistent way to compare the profitability of different companies.

EBITDA is commonly used as a measure of a company's operating performance, as it reflects the company's ability to generate profits from its core business operations. It is also used by investors and analysts to evaluate a company's financial health and to compare the performance of different companies in the same industry.

However, EBITDA is not a measure of cash flow and does not consider a company's capital expenditures or working capital needs, so it should be used in conjunction with other financial metrics to get a complete picture of a company's financial performance.