PT - JOURNAL ARTICLE AU - John C Calabrese AU - Brigid A. Rafferty TI - EBITDA DP - 2004 Mar 20 TA - Trading PG - 90--92 VI - 2004 IP - 1 4099 - http://guides.pm-research.com/content/2004/1/90.short 4100 - http://guides.pm-research.com/content/2004/1/90.full AB - Earnings Before Interest, Taxes, Depreciation and Amortization. It sounds simple, but this is not always the case. Lenders, investors, managers and other interested parties often use EBITDA as a close approximation of cash flow, so that a business in difficulty can be tracked as to its ability to meet the payroll and other immediate obligations. But how reliable is EBITDA? This article points out when and where EBITDA can be a misleading, rather than useful, measure. Add-backs, inventory valuation issues, timing differences, and capitalized future earnings are all topics to be carefully considered when using EBITDA to measure performance and progress.