EBITDA
Definition
Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash flow used in valuation.
Explanation
EBITDA strips out financing decisions (interest), tax jurisdictions (taxes), and non-cash charges (D&A) to reveal core operating performance. It enables comparisons between companies with different capital structures, tax situations, and asset ages. EV/EBITDA is the most common enterprise value multiple. However, EBITDA has critics: Warren Buffett argues it ignores the very real cost of replacing assets (capex). 'Does management think the tooth fairy pays for capital expenditures?'
How Stoquity Uses This
Stoquity incorporates ebitda analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.