# EBITDA

Earnings before interest, taxes, depreciation, and amortization.

## Definition

EBITDA adds non-cash depreciation and amortization back to operating profit. The idea: get a number that approximates cash generation from operations, ignoring accounting choices about how to expense long-lived assets.

## Formula

Operating Profit + Depreciation + Amortization

## Why it matters

EBITDA is widely used in M&A and credit analysis because it's harder to manipulate than reported earnings, and it's broadly comparable across companies with different capital intensities. Charlie Munger famously called it 'bullshit earnings' — that warning is fair: EBITDA ignores real costs of maintaining the asset base.

## How Standard Equity uses it

Not shown in the table. Used for net debt / EBITDA in the SE Grade's quality pillar, and forward EV/EBITDA is given to the AI analyst.

## The metric

| Category | Income Statement |
| -------- | ---------------- |
| Unit     | $M               |

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