EBITDA
Earnings before interest, tax, depreciation and amortisation.
Definition
EBITDA strips financing and accounting decisions out of profit to approximate operating performance, making businesses with different capital structures more comparable.
Why it matters
It is widely used in valuation and lending, and widely abused. EBITDA ignores real cash costs such as capital expenditure, so it should never be read as a proxy for cash generation.
Related terms
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