EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a metric used to evaluate a company’s operating performance. It is a measure of a company’s profitability and may be seen as a proxy for cash flow. In finance, the term is used to describe the amount of cash (currency) that is generated or consumed in a given time period.
EBITDA is different from Gross Profit, which is the income earned by a company after deducting the direct costs of producing its products or providing its services. It measures how well a company generates profit from their direct labor and direct materials.« Back to Glossary Index