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EBITDA: What It Hides, and Why Some Investors Distrust It

Reading Financial Statements • Beginner Investing • 6 min

EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization — is one of the most widely used shortcuts in finance, and also one of the most debated. The appeal is real: by stripping out interest (a financing decision), taxes (which vary by jurisdiction and situation), and depreciation and amortization (non-cash accounting charges), EBITDA aims to approximate a company's core operating cash-generating…

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