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A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA,[1] pronounced /ˈiːbɪtdɑː, -bə-, ˈɛ-/[2]) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base. It is derived by subtracting from revenues all costs of the operating business (e.g. wages, costs of raw materials, services ...) but not decline in asset value, cost of borrowing, lease expenses, and obligations to governments.
Though often shown on an income statement, it is not considered part of the Generally Accepted Accounting Principles (GAAP) by the SEC,[3] and hence the SEC requires that companies registering securities with it (and when filing its periodic reports) reconcile EBITDA to net income.[4]
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