Earnings before interest, taxes, depreciation and amortisation – a measure of operating earning power before reinvestment and financing.
EBITDA helps compare companies with different financing and tax situations. But it ignores that equipment and software must be replaced – for capital-intensive businesses it overstates earning power. EBIT (before interest and taxes, but after depreciation) is operating profit in the narrower sense. Warren Buffett has famously been sceptical of EBITDA.