EBITDA, or earnings before interest, taxes, depreciation, and amortization (in French: EBIT, or excédent brut d’exploitation – EBE), is a financial indicator used to assess a company’s operational performance by excluding items such as depreciation, amortization, interest, and taxes.

It allows profitability comparisons between companies, products, or business units and is commonly used in mergers and acquisitions to evaluate operating performance. EBITDA multiples, which are financial ratios comparing a company’s value to its EBITDA, help assess companies within the same industry or during transactions.

However, EBITDA has limitations: it does not take into account capital expenditures and can be manipulated to give a misleading picture of profitability.