EBITDA

EBITDA is a company's operating profit before interest, taxes, depreciation, and amortization are subtracted — used to compare core operating performance across companies with different capital structures.

EBITDA strips out financing decisions (interest), tax jurisdictions (taxes), and non-cash accounting charges (depreciation and amortization) so investors can compare two companies' core operating performance without those differences distorting the picture. A capital-heavy manufacturing business and an asset-light software business can look more comparable at the EBITDA line than at the net profit line.

EBITDA is not the same as cash flow, despite frequently being used as a rough proxy for it — it ignores capital expenditure, working capital changes, and debt repayment, all of which can consume real cash even while EBITDA looks healthy. It's a useful comparison tool, not a substitute for a full cash flow statement.