EBITDA
Earnings before interest, taxes, depreciation and amortisation — a rough measure of what the core business earns.
Formula
EBITDA = \text{Operating profit} + \text{Depreciation and amortisation}Computed from operating profit by adding back depreciation and amortisation. Where a company publishes its own EBITDA, our figure may differ — issuers have no single methodology, and that is normal.
How to read the number
EBITDA makes companies with different debt loads and tax histories comparable. Which is exactly why it is favoured by anyone who needs a business to look better than it is.
When the metric lies
EBITDA is not cash flow and ignores capital spending. A company with enormous EBITDA and equally enormous capex can return nothing to its owner for years.
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: ebitda