How does Adjusted EBITDA differ from standard EBITDA?

Adjusted EBITDA is a financial metric that modifies the standard EBITDA calculation by excluding certain one-time or non-recurring expenses, as well as non-core items that may not reflect the ongoing operational performance of a business. This adjustment provides a clearer picture of a company's underlying profitability by focusing on its core operating activities.

By removing these non-recurring items, Adjusted EBITDA offers investors, analysts, and management a more accurate measurement of current operational efficiency and profitability. For example, costs related to restructuring, legal settlements, or other unique situations that are not expected to happen regularly are often excluded. This approach allows stakeholders to assess the financial health of the company without the noise that irregular events can create in standard EBITDA calculations.

Therefore, the key distinction of Adjusted EBITDA is its focus on portraying a more reliable and continuous view of a company's earnings potential while factoring out anomalies that could skew the financial picture.