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I saw these in financial reports but I do not know what is EBITDA. |
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EBITDA stands for "earnings before interest, taxes, depreciation, and amortization." Computing this value involves adding back in the mentioned quantities to the earnings. Or, put another way, it involves taking income and subtracting out expenses except interest, taxes, depreciation, and amortization. EBITDA a non-GAAP measure (it does not conform to generally-accepted accounting principles). On the face of it, EBITDA is never lower than straight earnings, so at the very least it can be quoted to puff up the earnings posture of a company. Further, there is a fair amount of slush that can be used to distort this figure from one reporting period to the next. It seems to have most use to (a) creditors of a company because it gives a more balanced measure of the income available to repay interest, and (b) analysts who wish to measure the profitability of a company somewhat independent of financing and accounting decisions. |
Very good question!