What does EBITDA stand for?

What does EBITDA stand for?

• A. Earnings After Interest, Tax, Depreciation, and Amortization.
• B. Earnings Before Interest, Taxes, Depreciation, and Amortization.
• C. Earnings Before Interest, Tax, Depreciation, and Amortization.
• D. Earnings Before Interest, Tax, Depreciation, Amortization, and Amortization.

Answer: (C)

EBITDA is a measure of operating profitability that strips out financing and accounting decisions to focus on core operations. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, meaning you take earnings and add back interest expense, tax expense, depreciation, and amortization. The key idea is that taxes are excluded to reflect operating performance independent of tax structure, and the same principle applies whether you see the term as Taxes or Tax in slightly different wordings. This clarity helps compare how well a business runs its day-to-day operations, without the distortions from financing or non-cash charges like depreciation and amortization.

EBITDA is a measure of operating profitability that strips out financing and accounting decisions to focus on core operations. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, meaning you take earnings and add back interest expense, tax expense, depreciation, and amortization. The key idea is that taxes are excluded to reflect operating performance independent of tax structure, and the same principle applies whether you see the term as Taxes or Tax in slightly different wordings. This clarity helps compare how well a business runs its day-to-day operations, without the distortions from financing or non-cash charges like depreciation and amortization.