EBITDA is a measure of a company's operating performance, calculated by adding back depreciation and amortization to EBIT. It provides insight into operational cash flow.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a measure of a company's overall financial performance and is used as an alternative to net income in some cases. EBITDA adds back depreciation and amortization expenses to EBIT, providing a clearer picture of a company's profitability from its core operations without the effects of financing decisions, accounting methods, or tax environments. This metric is particularly useful for evaluating the profitability and cash flow generation of companies with significant investments in fixed assets, which are subject to depreciation. EBITDA is widely used by analysts and investors to assess and compare the financial health and performance of companies within and across industries.
