When reading about the financial performance of listed companies investors will often note the company leading with the EBITDA figure.

EBITDA is an acronym for Earnings before Interest, Taxes, Depreciation and Amortization. Essentially, it is the revenue of a company minus it expenses (excluding the aforementioned items).

The use of this technique is useful when comparing the profitability of companies as it helps to eliminate differences in accounting reporting decisions. However with so many expense items missing from the technique it is important that investors also look at other performance measures of the company.