Earnings Before Interest, Taxes, Depreciation and Amortization - EBITDA

Dictionary Says

Definition of 'Earnings Before Interest, Taxes, Depreciation and Amortization - EBITDA'

An indicator of a company's financial performance which is calculated in the following EBITDA calculation:

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)


EBITDA is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions.
Investopedia Says

Investopedia explains 'Earnings Before Interest, Taxes, Depreciation and Amortization - EBITDA'

This is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.

EBITDA first came into common use with leveraged buyouts in the 1980s, when it was used to indicate the ability of a company to service debt. As time passed, it became popular in industries with expensive assets that had to be written down over long periods of time. EBITDA is now commonly quoted by many companies, especially in the tech sector - even when it isn't warranted.

A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability, but not cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings. When using this metric, it's key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA.
Search results for

'Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)'

  • What's the difference between EBITDA, EBITDAR and EBITDARM?

    http://www.investopedia.com/ask/answers/09/ebitda-ebitdar-ebitdarm.asp
    ... EBITDAR, or earnings before interest, taxes, depreciation, amortization and
    rent/restructuring costs, is the same calculation as EBITDA, with the exception ...
  • A Clear Look At EBITDA

    http://www.investopedia.com/articles/06/ebitda.asp
    ... quarterly reports and accounts: earnings before interest, taxes, depreciation and
    amortization (EBITDA ... The earnings, tax and interest figures are found on ...
  • EBITDA: Challenging The Calculation

    http://www.investopedia.com/articles/analyst/020602.asp
    ... EBITDA, an acronym for "earnings before interest, taxes, depreciation and
    amortization," is an often-used measure of the value of a business. ...
  • 5 Common Trading Multiples Used In Oil And Gas Valuation

    http://www.investopedia.com/articles/basics/11/common-multiples-used-in-oil-and-gas-valuation.asp
    ... or the earnings before interest, taxes, depreciation and amortization (EBITDA) multiple,
    this is often used to determine the value of an oil and gas company. ...
  • Value Investing Using The Enterprise Multiple

    http://www.investopedia.com/articles/fundamental-analysis/08/enterprise-multiple.asp
    ... such as price to earnings (P/E), price to book (P/B), enterprise value (EV), earnings
    before interest, taxes, depreciation and amortization (EBITDA) or the ...
  • Investment Valuation Ratios: Enterprise Value Multiple ...

    http://www.investopedia.com/university/ratios/investment-valuation/ratio8.asp
    ... The data for Zimmer Holdings' enterprise value and earnings before interest, taxes,
    depreciation and amortization (EBITDA) were obtained from its stock quote ...
  • Series 65 Study Guide - Quantitative Methods of Evaluating ...

    http://www.investopedia.com/exam-guide/series-65/quantitative-methods/income-statement-key-calculations.asp
    ... Another EBIT measure is EBITDA, which is Earnings Before Interest, Taxes, Depreciation
    and Amortization. EBITDA can be used to analyze the profitability ...
  • 4 Steps To Picking A Stock

    http://www.investopedia.com/articles/stocks/09/screening-stocks-for-investing.asp
    ... earnings (P/E), price-to-sales (P/S), price-to-book (P/B) and enterprise value to
    earnings before interest, taxes, depreciation and amortization (EV/EBITDA). ...
  • Financial Statements: Earnings | Investopedia

    http://www.investopedia.com/university/financialstatements/financialstatements4.asp
    ... 3. Income From Continuing Operations Before Taxes (Pre-Tax Earnings)
    Pre-tax earnings subtracts (includes) interest expense. ...
  • Winn Dixie Drives Sales, Now Time For Profits

    http://stocks.investopedia.com/stock-analysis/2011/Winn-Dixie-Drives-Sales-Now-Time-For-Profits-WINN-KR-SVU-SWY1102.aspx
    ... The company's adjusted earnings before interest, taxes, depreciation and amortization
    (EBITDA) for the quarter was $7.4 million versus a loss in year ago period ...

Related Articles

Partner Links