If you operate a general equipment rental company the answer is A.
If you operate a party rental company, the answer is C.
If you operate a larger, multiple location business with larger iron, the answer is D.

EBITDA (adjusted for non-recurring and unusual or personal expenses that are not business related that are running through the business via the profit and loss statement or adjusted for things such as excess owner’s compensation and perks) is a “normalizing” measurement used to evaluate and value all certain types of rental companies.

So, no matter if you have a lot of debt (and therefore a lot of interest expense), no debt, varying depreciation schedules, etc. your company is measured on a “level playing field” with other rental companies using EBITDA.

EBITDA is basically the cash flow a company has available to it for debt service. If you don’t know your EBITDA, you should!