What does EBITDA stand for?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This financial metric is used to assess a company's operating performance by focusing on earnings generated from its core business operations without the influences of capital structure (interest), tax rates (taxes), and non-cash accounting items like depreciation and amortization.

The importance of EBITDA lies in its ability to provide a clearer representation of a company's operational profitability and allows for easier comparison between companies, regardless of their capital structures or tax situations. By excluding interest and taxes, it emphasizes operational performance and value generation from core activities.

The other definitions are not accurate representations of EBITDA, as they include elements that are either not part of the calculation (like "Economic Benefits" or "Equity") or incorrectly describe the components that should be excluded (for example, incorporating dividends as part of operational earnings).