Adjusted EBITDA is a refinement of the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) metric that is widely used to evaluate a company's financial performance and eliminate the effects of financing decisions, accounting choices, or tax environments. The 'Adjusted' modification removes certain one-time, irregular, or non-cash items to provide a clearer view of a company's typical operational profitability.

For instance, if a company incurs a large expense due to a legal settlement or an acquisition process, this would skew the EBITDA figure. By adjusting for such items, Adjusted EBITDA gives stakeholders a more consistent and comparable measurement across periods, especially helpful when evaluating performance during mergers or acquisitions. For example, a company might report "Our Adjusted EBITDA improved by excluding one-time acquisition costs, showing a 20% growth in underlying performance this year."

Overall, Adjusted EBITDA is frequently used in investment analysis, credit ratings, and other financial assessments. Since it neutralizes irregularities, it provides a benchmark that is more pragmatic than standard EBITDA for assessing recurring profitability.