What does EBITDA exclude that NPAT accounts for?

EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, focuses on a company's operational profitability by excluding the impacts of financing and accounting decisions. Specifically, it does not take into account interest expenses and taxes, allowing analysts to assess the company's operational performance without the influence of its capital structure or tax strategies.

On the other hand, NPAT stands for Net Profit After Tax, which is calculated after accounting for all expenses, including interest and taxes. Therefore, it reflects the company's true profitability from all business operations, inclusive of all financing costs and tax obligations.

This distinction is crucial because while EBITDA provides insights into operational efficiency and cash flow generation, NPAT presents a final profit figure that represents the earnings available to shareholders after all expenses have been deducted. Thus, the correct choice highlights the components that EBITDA intentionally omits while NPAT integrates them into its calculation.