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EBITDA

Earnings before interest, taxes, depreciation and amortization.

FundamentalsIntermediate

Definition

EBITDA adds back financing costs, taxes and non-cash charges to show operating performance before those items. It is used to compare companies with different debt levels and tax situations, and it is the base for the EV/EBITDA multiple.

Watch out for

It ignores capital spending and can flatter heavy-investment businesses. It is not a cash flow measure.

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