The term EBITDA refers to earnings before which of the following?

• A. Earnings before interest, tax, depreciation and amortisation.
• B. Income tax, depreciation and amortisation.
• C. Investment, tax, depreciation and assets.
• D. Interest, tax and deductible assets.

Answer: (A)

EBITDA focuses on operating performance by removing the effects of financing and accounting decisions. It stands for earnings before interest, tax, depreciation and amortisation. Interest and taxes are excluded because they depend on a company’s financing structure and tax environment, not its day-to-day operations. Depreciation and amortization are non-cash charges that reflect past investments in tangible and intangible assets, not current cash earnings. By adding these back, EBITDA provides a view of profitability from operations before these non-operating items. The other options mix in items that aren’t part of the standard definition, or omit components, so they don’t match the widely used meaning.