What does EBITDA stand for?

EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization." This financial metric is widely used to evaluate a company’s operating performance by focusing on its earnings from core operations without the impacts of capital structure, tax rates, and non-cash accounting items such as depreciation and amortization.

The correct option effectively identifies all key components of EBITDA, emphasizing the earnings aspect while excluding costs related to interest payments, taxes, as well as depreciation and amortization. This is crucial for analysts and investors as it provides a clearer view of operational efficiency and profitability, allowing for more accurate comparisons between companies in the same industry, regardless of their capital structures or tax strategies.

The other listed options either include terms that don't pertain to EBITDA or incorrectly frame the components, thus deviating from the accepted definition of this important financial metric. Understanding the precise components of EBITDA is essential for analyzing company performance and making informed investment decisions.