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Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's core operating profitability.
EBITDA strips out financing decisions (interest), tax jurisdictions (taxes), and accounting policies (depreciation and amortization) to focus on operational performance. It is widely used in valuation, particularly for comparing companies across industries or countries. The EV/EBITDA ratio (enterprise value divided by EBITDA) is a popular valuation metric, with typical values ranging from 8x to 15x depending on the industry. Critics argue EBITDA can be misleading because it ignores real costs like capital expenditures and tax obligations.