Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA looks at the cash flow of a company. It is a measure of cash flow calculated as: Revenue minus Expenses (excluding tax, interest, depreciation and amortization). By not including interest, taxes, depreciation and amortization, we can clearly see the amount of money a company brings in. This is especially useful when one company is considering a takeover of another, because the EBITDA would cover any loan payments needed to finance the takeover.