EBITDAR

EBITDAR is a financial metric used to assess a company’s operational profitability. It stands for Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent. By excluding these items, EBITDAR provides a clearer picture of a company’s core operational performance.

Investors and analysts use EBITDAR to assess a company’s financial health and to calculate valuations during mergers and acquisitions.

EBITDAR provides a more accurate basis for comparing profitability across companies, particularly for businesses with significant lease or rental expenses, such as hospitality, airlines, or retail. 

Consider an airline that leases a significant portion of its aircraft and airport facilities. By using EBITDAR, analysts can strip out these costs and gain a better understanding of how effectively the airline is managing its core operations.