Definition

EBITDA ( earnings before interest, taxes, depreciation, and amortization)

EBITDA, EBITD, and EBIT are financial terms used to report a company's earnings as they would be without specific deductions taken from the total amount. The acronyms mean, respectively: earnings before interest, taxes, depreciation, and amortization, earnings before interest, taxes, and depreciation, and earnings before interest and taxes. 

EBITDA is often used to compare the profit potential between companies because it allows an "apples-to-apples" comparison. Experts caution, however, that EBITDA does not accurately reflect a company's ability to generate cash and should not be used interchangeably with the term "cash flow".

This was last updated in June 2007
Posted by: Margaret Rouse

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