It stands for earnings before interest, depreciation and amortization. By definition, it is a measure of a firm’s cash flow where interest expenses, depreciation and amortization are added back to the net income.

However, and contrary to EBIT, it is not net of tax expenses. In other words, EBIDA doesn’t assume that tax expenses can be reduced by deducting the interest expense before the calculation of taxes. Therefore, it doesn’t add the tax expense to net income.