Ebitda
‘EBITDA’ stands for ‘earnings before interest, taxes, depreciation, and amortization.’ It’s a measure of a company’s profitability that stripping out the impact of certain types of expenses.
depreciation and amortization are non-cash charges that represent the reduction in value of assets over time or the allocation of the cost of intangibles such as patents over their useful life. Interest and taxes can vary significantly from year to year, making EBITDA a more consistent measure of profitability.
While EBITDA is not a perfect measure, it is useful in assessing a company’s underlying operating performance and is often used as a starting point in valuation analyses.