EBITDA explained
EBITDA is a very long acronym but it is pretty easy to understand.
EBITDA stands for Earnings before interest, taxes, depreciation, and amortization.
EBITDA can be a great way to measure a companies performance. Most novice investors just see a companies earnings for the quarter and do not delve any deeper. Taxes could have risen or fallen, interest rates could have changed… Plenty of things can alter a companies earnings number other then their actual business.
As an investor you want to understand a companies core business and realize that the actual success or lack thereof the business has will end up determining the success of the companies stock and your investment.
Taxes matter, Interest matters, depreciation and amortization all matters, but they mean little when compared to the core business of a company.