EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It strips out a company's financing choices (how much debt it carries, so interest expense) and accounting choices (how it depreciates assets on paper) to show something closer to the raw operating performance of the business. It's especially useful for comparing two companies in the same industry that might have very different debt levels or accounting policies — EBITDA levels the playing field. The catch: EBITDA ignores real costs like interest and eventual equipment replacement, so it can make a heavily indebted or capital-hungry business look healthier than it really is if you rely on it alone.