Definition: EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company's overall financial performance and is used as an alternative to net income in some circumstances. EBITDA, however, can be misleading because it strips out the cost of capital investments like property, plant, and equipment.

In Plain English: EBITDA is what you are left with after you subtract your cost of goods sold and operating expenses from your revenue.

Example: If you sold two pairs of shoes for $100 each your revenue would be $200. Less your cost of goods sold (what it took to make the shoes) $40 per pair = $40+$40=$80, and minus your operating expenses (what it takes to run the business) $50 you end up with your EBITDA = $200-$80-$50 = $70.

EBITDA is a snapshot of your business’ operational efficiency. How much are you left with after normal business operations (selling products minus what it takes to sell those products)?