What does EBITDA stand for?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This financial metric is widely used to assess a company's operating performance by removing the impacts of financial structure (interest), tax rates, and the accounting effects of depreciation and amortization.

By focusing on earnings derived from core operations, EBITDA provides a clearer view of profitability without the influence of capital structure and non-cash accounting items. This makes it particularly useful for comparing companies within the same industry, as it standardizes earnings across different capital and tax environments. It can also serve as a proxy for cash flows and a measure of a company's operational efficiency.

The other options contain incorrect terms, such as dividends and allowances, which do not pertain to the definition of EBITDA. This incorrect terminology prevents those definitions from accurately representing the concept that EBITDA aims to convey.