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EBITDA

Earnings before interest, taxes, depreciation and amortization: operating profit with the non-cash charges for wearing out and using up assets added back. It's a rough measure of what the operations earn before spending on new equipment.

Simple example

A company has operating profit of $15 and $10 of depreciation and amortization. Its EBITDA is $15 + $10 = $25.

$15Operating profit+$10Depreciation andamortization$25EBITDA
Made-up numbers, for illustration only.

Related terms

Adjusted EBITDAEBITDA with further costs the company chooses to leave out.DepreciationSpreading the cost of machines and buildings over the years they're used.AmortizationSpreading the cost of intangible assets over the years they're useful.EV/EBITDAEnterprise value divided by EBITDA.