EBITDA
EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization," which can be translated to earnings before interest, taxes, depreciation and amortization. It is used as a measure and gives an indication of a company's operating performance by excluding the above cost items. EBITDA helps to see how profitable a company really is without the effects of finance and accounting. This makes it easier to compare different companies.
Benefits of EBITDA
The role of EBITDA in financial analysis is great. It helps investors and analysts understand a company's underlying earnings potential. This is done independently of external factors such as tax policies and large write-offs. EBITDA is widely used in the financial reports of publicly traded companies, by analysts and in evaluating mergers and acquisitions. It helps investors assess the true operating performance of companies wherever they are located. This approach shows how companies really perform purely on the basis of their operations.
