What is EBITDA?
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EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. EBIT is taken from the income statement (also called operating profit), and depreciation and amortization are typically found on the cash flow statement. Adding depreciation and amortization back to EBIT yields EBITDA, which is commonly used to compare the profitability of companies within the same industry.
It's a profitability measure that strips out financing and accounting choices so companies compare cleanly. Start from operating profit, then add back depreciation and amortization.