What does EBITDA stand for?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This financial metric is widely used to assess a company's operational performance and profitability by focusing on earnings derived from core business operations, excluding the effects of capital structure, tax rates, and non-cash accounting items such as depreciation and amortization. By doing so, it provides a clearer view of a company's operating efficiency and cash flow generation capabilities.

The significance of EBITDA lies in its ability to give investors and management a straightforward measure of how well a company is performing from its core business activities, regardless of the financing or accounting choices made. It is particularly useful for comparing the financial performance of companies within the same industry, as it normalizes variations in tax rates and capital investments.

In this context, the other options do not accurately reflect the established definition of EBITDA. They either misdefine the components included in the calculation or use incorrect terminology that diverges from standard financial practices.