EBITDA. An approximate measure of a companys operating cash flow based on...

cash flow measurement that excludes interest, taxes, depreciation and amortization, often used in buyout or public offering instances as opposed to ongoing financial business performance.

A measure of cash profitability typically applied to companies that have been subject to a leveraged buyout (LBO). EBITDA is operating profit before depreciation, as well as operating revenue minus cost of sales, operating expenses, and selling, general, and administrative expenses. A measure of cash flow calculated as: = Revenue - Expenses (excluding tax, interest, depreciation and amortization) EBITDA looks at the cash flow of a company. 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. See Creating Your Pitch: Business Model and Financial Projections.