EBITA

EBITA stands for earnings before interest, taxes and amortization. It is operating income with amortization of intangible assets added back, while depreciation of physical assets stays in.

The formula is:

The reason to add back only amortization is that much of it comes from acquisitions. When one company buys another, part of the price is recorded as intangible assets like customer lists, which are then amortized for years. That charge reflects a past deal, not the cost of running the business today.

EBITA is common for companies that grow through acquisitions, letting investors compare them with companies that grew on their own. Depreciation stays in because equipment and buildings wear out and need replacing, so it remains an ongoing cost of the business.