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 by focusing on the earnings generated from its core business activities before the impact of financial and accounting decisions such as interest payments, tax obligations, and non-cash accounting items like depreciation and amortization.

Using EBITDA allows for a clearer comparison of profitability between companies by stripping away variables that may differ significantly from one business to another. This is particularly useful for investors and analysts looking to gauge operational efficiency without the noise of capital structure or tax strategies that can distort actual performance measures.

The other options do not accurately represent the components of EBITDA, which includes earnings and specific exclusions that are critical for understanding this financial metric's purpose.