EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization
EBITDA , or Earnings Before Interest, Taxes, Depreciation, and Amortization, is a financial metric that measures a company's profitability before accounting for non-operating expenses and the effects of financing and accounting decisions. EBITDA is often used by investors and analysts as a way to compare the performance of companies across different industries and accounting methods. In this article, we will delve into EBITDA in more detail, including its calculation, advantages, limitations, and an example of how it is used. Calculation of EBITDA EBITDA is calculated by adding a company's earnings before interest and taxes (EBIT) to depreciation and amortization expenses. The formula for calculating EBITDA is: EBITDA = EBIT + Depreciation + Amortization Here, EBIT is calculated by subtracting a company's operating expenses from its gross revenue. Depreciation and amortization expenses represent the decline in value of assets and intangible assets over time, respectively....