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Acronyms Dictionary

EBITDA

Definition

Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of overall financial performance.

Deep Dive

EBITDA is an alternate measure of profitability to net income. By stripping out non-operating expenses like interest and taxes, as well as non-cash charges like depreciation, it allows for a "cleaner" comparison of operational efficiency between companies.

Examples & Use Cases

  • 1Using an EBITDA multiple to determine the valuation of a company during an acquisition
  • 2Comparing the EBITDA of two manufacturing firms to see which is more operationally efficient
  • 3Calculating EBITDA by adding back taxes, interest, and depreciation to net profit

Related Terms

P&LNet IncomeCash Flow

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