EBITDA

EBITDA is the acronym for Earnings Before Interest, Tax, Depreciation, and Amortization. EBITDA measures a company’s operating performance and is a widely accepted way to evaluate a company’s performance without having to factor in financial decisions, accounting decisions or tax environments. EBITDA is calculated by adding back the non-cash expenses of depreciation and amortization to a firm’s operating income. EBITDA allows analysts to generate useful comparisons between companies, project long-term profitability, and the ability to pay off future financing. EBITDA also can be used to calculate the income available for interest payments to a company’s secured creditors.