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EBITDA Calculator
EBITDA is earnings before interest, taxes, depreciation and amortization. Enter net income and add back those four items from the income statement to get EBITDA, EBIT and — with revenue — the EBITDA margin.
- EBIT
- $670,000.00
- EBITDA margin
- 25.67%
- Total added back
- $270,000.00
- Net income
- $500,000.00
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Your recent calculations
Results you calculate here are kept on this device so you can come back to them.
Formula
How to use it
- Enter net income (the bottom line) for the period.
- Enter interest expense and income taxes.
- Enter depreciation and amortization — often shown together on the cash flow statement.
- Enter revenue to get the EBITDA margin.
Worked examples
$500,000 net income with $50,000 interest, $120,000 tax, $80,000 depreciation and $20,000 amortization on $3,000,000 revenue
- EBIT
- $670,000.00
- EBITDA
- $770,000.00
- EBITDA margin
- 25.67%
- Total added back
- $270,000.00
$85,000 net income with $12,000 interest, $23,000 tax and $30,000 depreciation on $1,000,000 revenue
- EBIT
- $120,000.00
- EBITDA
- $150,000.00
- EBITDA margin
- 15%
What EBITDA is for
By stripping out financing (interest), tax and the non-cash charges for past investment (depreciation and amortization), EBITDA lets you compare the operating performance of companies with different debt levels, tax positions and asset ages. Business valuations are often quoted as a multiple of it.
You can also build it from the top: operating income (EBIT) plus depreciation and amortization. Both routes give the same number.
What it leaves out
EBITDA is not a measure under GAAP or IFRS and it is not cash flow. It ignores capital spending, changes in working capital, and the very real cost of interest and tax. A business that must keep replacing expensive equipment can show a healthy EBITDA and still burn cash.
“Adjusted EBITDA” goes further by removing items management considers one-off. Always look at what was adjusted and why.
Questions people ask
How do you calculate EBITDA from net income?
Add back interest, taxes, depreciation and amortization. $500,000 of net income plus $50,000 interest, $120,000 tax, $80,000 depreciation and $20,000 amortization gives EBITDA of $770,000.
What is the difference between EBIT and EBITDA?
EBIT adds back only interest and taxes, so it still includes depreciation and amortization as costs. EBITDA adds those back as well, so it is always equal to or higher than EBIT.
What is a good EBITDA margin?
It varies by industry. Many established businesses fall between 10% and 20%; software and other asset-light businesses can run much higher, while retail and distribution are often in single digits.