EBITDA stands for earnings before interest, taxes, depreciation, and amortization, a measure of a company's core operating profitability that strips out financing decisions, tax situations, and non-cash accounting charges to make different companies easier to compare.
Because it excludes interest and taxes, EBITDA lets someone compare two companies' underlying operating performance without one looking worse just because it carries more debt or operates in a higher-tax jurisdiction. Adding back depreciation and amortization also strips out accounting choices about how fast to write down assets, which can otherwise vary a lot between companies doing similar things.
EBITDA is not the same as cash flow, despite sometimes being used as a rough stand-in for it. It ignores real cash needs like capital expenditures and changes in working capital, which is why a company can show healthy EBITDA and still be burning cash. Useful for comparison, not a substitute for actually reading the cash flow statement.
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