# EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization — a common measure of a company’s core operating profitability.

**Acronym:** EBITDA

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) strips out financing and accounting effects to approximate the profit a business generates from its operations. It is widely used to compare performance and to value companies.

In a transformation or value-creation context, “EBITDA leakage” describes value lost when strategy fails in execution — the gap between the operating improvement that was planned and what actually reached the bottom line.

### Commonly confused

Adjusted EBITDA. EBITDA is earnings before interest, taxes, depreciation, and amortization; adjusted EBITDA adds back one-off or non-operating items to show normalized earnings. Taking adjusted EBITDA at face value hides optimism in the add-backs.

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