Earnings Before Interest, Taxes, and Depreciation

Earnings before interest, taxes, and depreciation (EBITD)

A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation expenses are not included in the costs.

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Earnings Before Interest, Taxes, and Depreciation

A measure of a company's ability to produce income on its operations in a given year. It is calculated as the company's revenue less its expenses (such as overhead), but including its tax liability, interest paid on debt, and depreciation. It is important to note that EBITD does not account for one-off or otherwise unusual revenues and expenses, only recurring ones. Depreciation is excluded because it is a deduction from profit that does not have to be paid in cash and is thus not useful for determining cash on hand. EBITD represents cash available to pay off creditors in the event of liquidation, and, as such, it is closely watched, especially when the company has little amortization. See also: EBIT.