ebitda
ˌiː.bɪt.diːˈeɪ
Definition
An acronym standing for earnings before interest, taxes, depreciation, and amortization, used here as a gauge of a company's operational profitability and ability to generate cash.
Etymology
The term is an acronym formed in the 1970s and 1980s by leveraged buyout investors to identify the cash available to pay back debt. It was adopted into general financial accounting to provide a clearer view of core operational performance by excluding non-cash and financing-related expenses.
In the news
In this article, EBITDA serves as a proxy for operating cash flow to help investors assess whether tech companies can fund their massive AI infrastructure investments without relying on debt. It is also a key component in calculating free cash flow, which dictates a company's capacity for share buybacks.
Why tech investors are reevaluating AI investments
Read the full article ↗ING THINK economic and financial analysis | ING THINK