What Is the Meaning of EBITDA?


Quick Answer

EBITA is a financial acronym for a company's earnings before interest, depreciation and amortization. It is a company's net income before the specified deductions are excluded. Generally it is used to eliminate the effects of financing and accounting decisions when comparing company and industry profitability.

Continue Reading
Related Videos

Full Answer

EBITA is typically used in comparing businesses with significant investment in equipment that necessitates a high level of depreciation, such as manufacturing. It is also used when a company has acquired a large amount of intangible assets, such as the recent purchase of a brand or another business that requires a high level of amortization. EBITA also provides a more accurate representation of a company's ability to pay for financing, since it shows the amount of cash available to pay interest.

Learn more about Financial Calculations

Related Questions