Definition

EBITDA stands for Earnings Before Interest Tax Depreciation Amortization, and measures the overall financial performance of a company. Or better put, EBITDA measures a company's profitability.

Calculation

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Why is it important?

It is said that "EBITDA offers a clearer reflection of operations by stripping out expenses that can obscure how the company is really performing."