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Financial Metrics

EBITDA

Earnings before interest, taxes, depreciation, and amortization.

In depth

EBITDA approximates operating cash flow before capital structure and accounting choices. Useful for comparing operating performance across companies and industries. Critics (notably Warren Buffett) argue EBITDA understates real expenses — depreciation reflects real wear-and-tear that requires future capex.

Frequently asked about EBITDA

What is EBITDA?

Earnings before interest, taxes, depreciation, and amortization. EBITDA approximates operating cash flow before capital structure and accounting choices. Useful for comparing operating performance across companies and industries. Critics (notably Warren Buffett) argue EBITDA understates real expenses — depreciation reflects real wear-and-tear that requires future capex.

Why does EBITDA matter for investors?

In financial metrics, EBITDA is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.

How is EBITDA used in practice?

EBITDA approximates operating cash flow before capital structure and accounting choices. Useful for comparing operating performance across companies and industries.

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