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EBITA / EBITDA - Earnings before interest, taxes, (depreciation), and amortization




Are measures of company profitability used by investors. Are used for comparing one company to others in the same line of business. Are helpful as they provide a more accurate view over the company's actual performance over time.

EBITA is an accurate representation of a company's actual earnings. One of the benefits is that it indicates more accurately how much cash flow a company has on hand to reinvest in the business or pay dividends.

EBITDA is a similar metric that adds depreciation to the list of factors eliminated from the earnings total. That is earnings before interest, taxes, depreciation, and amortization.

EBITA is not as commonly used as EBITDA. The extra factor, depreciation, represents the recording of how a company's tangible assets decrease their value over time. It is a way of accounting for the wear and tear on assets such as equipment and facilities.