It is the acronym for “earnings Before interest, taxes, depreciation and amortization”. It is a type of earnings that refer to the company’s revenue derived from their normal operations before have to account for the operating expenses of those and previous operations. It is a way to measure a company´s current performance and is useful to analyze performance over time.

It is obtained during the development of the business because it is achieved in an independent way in terms of how companies finance their assets (they do not include financial expenses) or the income taxes that are applied. For its calculation, you only have to add the pre-tax income, financial expenses, amortizations and depreciations (because these two do not indicate a distribution of the profits but an accountancy loss derived from the use of the fixed assets over time). If from this calculation we subtract the amortizations and depreciations, we obtain EBIT. EBITDA is useful as a means of comparison with other companies in the same sector because it does not take into account the method of amortization used (which may vary significantly from one company to another) or its financial structure. ebitda is similar to the concept of operating cash flow because depreciations and amortizations are added, so it would represent the company’s ability to generate liquid assets. When making its calculation, as a consequence of omitting financial expenses and taxes, and supposing that everything that has being sold has being collected, and everything bought has being paid, this makes EBITDA not completely representative indicator of the company’s real situation