Definition:

EBITDA is a company’s net income excluding the effect of interest, taxes, depreciation and amortization.

Example:

A company generates $50,000 of revenue in a month. After deducting operating expenses, the EBITDA is $15,000.
Depreciation for the business is $5,000, Interest expense is $6,000, and Tax is $800, resulting in a Net Income of $3,200.

Why it matters:

As EBITDA excludes depreciation it is a useful proxy for cash generated by the business before financing and taxation are considered.