The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is EBITDA?” which is earnings before interest, taxes, depreciation and amortization. We actually just told you what EBITDA is, but really, what is EBITDA? How do we use it? How do we calculate it? Why do we even care what EBITDA is? Now, this takes me all the way back to my original finance and schooldays back at UVA and even when I went to work in New York and worked in BB&T capital markets as a REIT analyst. We used EBITDA all the time in our industry jargon and finance. And so, what EBITDA does, it basically just takes what a company’s cash flow is and tries to break it down to the most basic, nondescript, non-structure or tax consequence level. And so, what I mean is when you look at a company and a company has earnings of say $100 million, that net earnings that they show of $100 million is already including things like the taxes that they had previously paid o