EBITDA is a finance term that stands for Earnings Before Interest, Depreciation, and Amortization and measures .
EBITDA is commonly used as a way to describe a companies financials and removing the impacts of financing and finer accounting decisions. It eliminates the variable of how companies funds its business using equity or through debt (loans).
Because of this, companies with considerable amounts of fixed assets, like property, assets, and equipment, have inflated EBITDA. Companies with virtually no fixed assets don't look as good with the same earnings.
For example, Twitter's 2nd quarter 2022 Statement provides a net income of a loss of $270,007,000. However, by adding back in stock-based compensation expenses ($282,190,000), depreciation and amortization expenses ($173,288,000), interest and other expense ($7,869,000), and a provision for income taxes ($65,897,000), the adjusted EBITDA is $111,705,000.
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