EBITDA
Earnings before interest, taxes, depreciation, and amortization.
What is EBITDA?
A rough proxy for operating cash generation that strips out financing and accounting choices, making companies more comparable. It also ignores real costs - capital equipment does wear out - so it flatters capital-intensive businesses.
EBITDA: a worked example
Two companies with identical EBITDA can have very different net income if one carries heavy debt.
More terms in Valuation & Analysis
Market Capitalization
Share price times shares outstanding - the equity value of a company.
Earnings Per Share (EPS)
Net income attributable to each share of common stock.
Price-to-Earnings (P/E) Ratio
Price per share divided by earnings per share.
Dividend Yield
Annual dividends per share divided by share price.
Payout Ratio
The share of earnings paid out as dividends.
Book Value
Assets minus liabilities - the accounting value of equity.
Free Cash Flow
Operating cash flow minus capital expenditures.
Return on Equity (ROE)
Net income divided by shareholders' equity.