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Adjusted EBITDA

Earnings before interest, taxes, depreciation and amortization, with further items removed that the company chooses to exclude. It isn't a standard accounting measure, so every company defines it a little differently.

Simple example

A company makes $10 of profit. Add back $10 of interest, taxes and depreciation and you get EBITDA of $20. Leave out another $4 of costs the company calls one-off, and it reports adjusted EBITDA of $24.

Profit+ interest, tax, depreciation+ excluded costs$10$20$24Net incomeEBITDAAdjusted EBITDA
Made-up numbers, for illustration only.

Related terms

EBITDAEarnings before interest, taxes, depreciation and amortization.Non-GAAP figuresCompany-defined numbers that leave out some official costs.Net incomeThe profit left after all costs, interest and taxes.