Attorneys who take part in reviewing financial statements should be aware that EBITDA means revenues less expenses, excluding tax, interest, depreciation, amortization.
EBITDA is an indicator of a company's financial performance, and can be used to analyze and compare profitability between companies and industries. EBITDA eliminates the effects of financing and accounting decisions, such as debt, income distortions from capital expenditure depreciation decisions, and accruals.
EBITDA is a non-GAAP measure that allows discretion as to what is, and is not, included in the financial performance calculation.
EBITDA is a metric to evaluate profitability, but not cash earnings.
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