Company Health
What is EBITDA?
Earnings before interest, taxes, depreciation, and amortization
Full Explanation
EBITDA strips out accounting costs and financing decisions to show the raw profitability of a business. It's widely used to compare companies across different tax and capital structures.
Real-World Example
Two companies earn different net incomes, but similar EBITDA — the difference is how they're financed, not how the business actually runs.
Pro Tip
Warren Buffett is skeptical of EBITDA — depreciation is a real cost, he argues. Know the limits.
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