earnings before interest taxes depreciation and amortization

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Explanation of "Earnings Before Interest Taxes Depreciation and Amortization"

Definition: "Earnings before interest, taxes, depreciation, and amortization," often shortened to EBITDA, is a financial term used to describe a company's income before certain expenses are taken away. These expenses include interest on loans, taxes paid to the government, and costs related to the reduction in value of physical assets (depreciation) and intangible assets (amortization). EBITDA helps investors understand how much money a company is making from its core operations.

Usage Instructions:

• Context: This term is mainly used in finance, accounting, and business discussions.
• How to Use: You can use "EBITDA" when talking about a company's profitability. It is often used in company reports, financial analyses, and when comparing the performance of different companies.

Example:

• "The company's EBITDA increased by 20% this year, indicating that its operations are becoming more profitable."

Advanced Usage:

Investors and analysts often use EBITDA to compare the financial health of companies within the same industry since it removes the effects of financing and accounting decisions. For example: - "When analyzing the tech industry, we prefer to look at EBITDA rather than net income, as it provides a clearer picture of operational efficiency."

Word Variants:

• EBIT: Earnings before interest and taxes (similar but does not include depreciation and amortization).
• Net Income: The total profit after all expenses, including interest and taxes, have been deducted.

Different Meanings:

While "earnings" generally refers to income or profit, in this specific financial context, it is more focused on operational income without the influence of certain financial decisions.

Synonyms:

• Operating income
• Operating profit
• Profit before interest and taxes (PBIT)

Idioms and Phrasal Verbs:

Although there are no direct idioms or phrasal verbs that specifically relate to EBITDA, you might hear phrases like: - "Breaking even": Refers to the point at which total revenues equal total costs, which can be used in discussions about profitability. - "In the black": This phrase means a company is profitable (as opposed to "in the red," which means it is losing money).

Summary:

EBITDA is an important measure for understanding how well a company is doing in its core business activities, excluding the effects of financing and accounting practices.

Academic

Noun

1. income before interest and taxes and depreciation and amortization have been subtracted; an indicator of a company's profitability that is watched by investors (especially in leveraged buyouts)

Synonyms

• EBITDA
• Earnings Before Interest Taxes Depreciation and Amortization