EBITDA

EBITDA (short for Earnings Before Interest, Tax, Depreciation and Amortization) is a measure of a company’s operating performance in terms of profitability. It is calculated by adding back the non-cash expenses of depreciation and amortization to a company’s operating income (EBIT). EBITDA allows to focus on the outcome of operating decisions while excluding the impacts of non-operating decisions like interest expenses (a financing decision), tax rates (a governmental decision), or large non-cash items like depreciation and amortization (an accounting decision).