Adjusted EBITDA stands for Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric that refines the standard EBITDA figure by excluding non-recurring, irregular, or non-cash expenses to provide a clearer picture of a company’s core operational performance. Adjustments may include restructuring costs, acquisition expenses, stock-based compensation, or one-time legal settlements.
In finance and investment analysis, Adjusted EBITDA is widely used to compare profitability across companies and industries by removing accounting and capital structure differences. It offers investors and analysts a normalized view of earnings that better reflects ongoing business health and cash flow potential. However, since adjustments vary between companies, this metric can be subjective and potentially misleading if not properly disclosed.
