EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation, is a measure of a company’s operating performance.
It focuses on the profitability from core business operations by excluding the effects of financing (interest), government (taxes), and non-cash accounting items (for example, depreciation). EBITDA is often used by investors and analysts to evaluate and compare the profitability of companies, especially those in capital-intensive industries.
While it provides a clearer picture of operational efficiency, it does not account for important costs like debt servicing or capital expenditures, so it should be used alongside other financial metrics for a full analysis.