EBITDA is defined as earnings before interest, depreciation, taxes, and amortization. EBITDA measures profitability. It is important to note that EBITDA can be misleading as a cash flow evaluation tool because it does not take into account cash used to fund working capital or replace old equipment.
To calculate EBITDA see line 21 of your business income tax return and add back lines: 12, 13, 14a, or use the following formula:
EBITDA = Revenue - Expenses (excluding tax, interest, depreciation, and amortization)
