EBITDA is a measure of earnings and cash flow. Its relevance and significance varies from industry to industry. Like any other measure of profitability it should be considered with others and in the context of the balance sheet and cash flow statements. In my experience, if Generally Accepted Accounting Principles are followed, this measure of income and cash flow is meaningful. When WorldCom filed for bankruptcy after fraudulently classifying expenses as capital expenditures to increase EBITDA, the measure came under scrutiny as easily manipulated. From what I've seen, EBITDA is no more easily manipulated that net income.
In practice, EBITDA is typically calculated by starting with operating income and adding back depreciation and amortization. This has the effect of excluding other income and expenses as well. You may also want to check out the Investopedia definition of EBITDA.
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