Financial Statements
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
Also called: earnings before interest taxes depreciation and amortization
What it means
EBITDA is a commonly used earnings measure that adds depreciation and amortization back to EBIT. Supporters use it to show operating performance before certain noncash charges. Critics note that it can make a business look stronger than its true cash reality if used carelessly.
Why it matters
Users will see EBITDA often in company presentations and valuation ratios, so they should understand both its usefulness and its limits.