EBITDA is a commonly used acronym meaning “Earnings Before Interest, Taxes, Depreciation and Amortization.” It is a non-GAAP measurement used to produce a view of profits before accounting adjustments. Employers have discretion in selecting what is included in the EBITDA calculation. Generally, it is calculated as follows: EBITDA = Revenue minus Expenses (excluding taxes, interest, depreciation and amortization). EBITDA is a popular metric used by companies when creating a Formula Value to be used in a phantom stock plan.
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