EBITDA Calculator

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Walk-through

How to Use This Calculator

3 steps

1

Pick a starting point

Choose "From net income" if you have a full income statement (net income, interest, taxes, depreciation, and amortization), or "From revenue" if you only have revenue and total operating expenses. Both paths land on the same EBITDA figure when the numbers agree.

2

Enter your figures

Fill in the fields for your chosen mode, plus revenue (needed for the margin calculation either way). The calculator updates EBITDA, the EBITDA margin, and the full build-up instantly as you type.

3

Check the build-up and margin

Switch to the Build-Up tab to see the line-by-line reconciliation from your starting figure to EBITDA, and the EBITDA Margin tab to see what share of revenue survives as EBITDA — useful for comparing operating efficiency across periods or against peers.

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Reference

Formula & Methodology

3 formulas

EBITDA from net income

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Start with the bottom-line net income and add back the four items that don't reflect core operating cash flow: interest (a financing cost), taxes (which vary by jurisdiction and tax strategy), and depreciation and amortization (non-cash charges for spreading the cost of assets over time).

EBITDA from revenue

EBITDA = Revenue − Operating Expenses

When operating expenses already exclude interest, taxes, depreciation, and amortization, EBITDA is simply revenue minus that operating-expense total. This shortcut is common when working from a management P&L rather than a full statutory income statement.

EBITDA margin

EBITDA Margin = EBITDA ÷ Revenue

Expressed as a percentage, the EBITDA margin shows how much of every revenue dollar is left over as EBITDA before financing costs, taxes, and non-cash charges. Higher margins generally indicate more efficient core operations, though "normal" margins vary widely by industry.

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Glossary

Key Terms Explained

7 terms

EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of a company's core operating profitability that strips out financing decisions, tax jurisdiction, and non-cash accounting charges.

EBITDA margin EBITDA divided by revenue, expressed as a percentage. Measures how efficiently revenue converts into operating profit before financing, tax, and non-cash items.

Interest The cost of borrowed money — interest paid on loans, bonds, or lines of credit. Added back to net income because it reflects a company's capital structure (how it's financed), not its operating performance.

Taxes Income taxes paid or accrued for the period. Added back because tax rates and strategies vary by jurisdiction and ownership structure, which can obscure comparisons between companies.

Depreciation A non-cash accounting charge that spreads the cost of tangible assets — equipment, vehicles, buildings — over their useful life. Added back to EBITDA because it doesn't represent a current cash outflow.

Amortization The intangible-asset counterpart to depreciation — spreading the cost of patents, trademarks, licenses, or goodwill over time. Like depreciation, it's a non-cash charge added back to EBITDA.

Operating profit A close relative of EBITDA that generally refers to earnings from core operations. EBITDA goes one step further than operating profit (EBIT) by also adding back depreciation and amortization.

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Scenarios

Real-World Examples

3 worked examples

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Small manufacturer

From net income

Net income $500,000 Interest $50,000 Taxes $120,000 Depreciation $80,000 Amortization $20,000 Revenue $3,000,000

EBITDA = $500,000 + $50,000 + $120,000 + $80,000 + $20,000 = $770,000. Against $3,000,000 of revenue, that's a 25.7% EBITDA margin — the depreciation add-back ($80,000) is the single biggest swing factor for asset-heavy manufacturers like this one.

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Comparing efficiency

EBITDA margin

EBITDA $770,000 Revenue $3,000,000

$770,000 ÷ $3,000,000 = 25.7% EBITDA margin. A higher margin than a same-size competitor generally means this business converts revenue into operating profit more efficiently, before accounting for how each company is financed or taxed.

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Management P&L only

From revenue

Revenue $3,000,000 Operating expenses $2,200,000

EBITDA = $3,000,000 − $2,200,000 = $800,000, a 26.7% margin. This shortcut works when "operating expenses" is already defined to exclude interest, taxes, depreciation, and amortization — check the source P&L before assuming that's the case, since a mismatched definition will over- or under-state EBITDA.

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Deep Dive

Understanding the EBITDA Calculator

3 chapters · 4 min read

EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization — is one of the most widely used shorthand measures of a company's core operating profitability. This calculator computes it two ways, from a net-income statement or straight from revenue, and shows the EBITDA margin and full reconciliation build-up alongside it.

How the EBITDA Calculator works

The calculator supports two starting points. From net income, it adds back interest, taxes, depreciation, and amortization — the standard "bottom-up" build-up used when a full income statement is available. From revenue, it subtracts total operating expenses (assumed to already exclude those same four items) — a faster route when only a management P&L is on hand. Both should converge on the same figure when the underlying numbers are consistent; a meaningful gap between the two usually means the "operating expenses" figure in the revenue-based mode includes something it shouldn't, like interest or a large depreciation line.

EBITDA margin is calculated as EBITDA divided by revenue, expressed as a percentage. It's a normalized way to compare operating efficiency between companies of very different sizes or between different periods for the same business.

Inputs and what they mean

In "From net income" mode, enter net income, interest expense, income taxes, depreciation, and amortization — all typically found directly on an income statement or in its notes. In "From revenue" mode, enter total revenue and total operating expenses, where operating expenses should exclude interest, taxes, depreciation, and amortization. Revenue is required in both modes because it's also used to compute the EBITDA margin. Depreciation tends to be the largest add-back for asset-heavy businesses (manufacturing, real estate, transportation); amortization is usually larger for companies with significant intangible assets or past acquisitions (goodwill).

Limits and edge cases

EBITDA is not a GAAP or IFRS-defined measure — companies can and do calculate it differently, so comparisons across companies should be treated as directional rather than exact unless you've confirmed both use the same definition. EBITDA also excludes changes in working capital and capital expenditures, so it can overstate the cash actually available to a business, especially one that needs to keep reinvesting heavily in equipment (a limitation famously summarized by investor Charlie Munger's comment that EBITDA is "bullshit earnings" if it ignores real capital needs). When revenue is zero or negative, the EBITDA margin is mathematically undefined and the calculator flags it rather than showing a nonsensical percentage. For deal-making, valuation, or lending decisions, treat this calculator's output as a starting estimate and verify the underlying figures with a qualified accountant.

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Questions

Frequently Asked Questions

6 questions

What is the EBITDA formula?+

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Equivalently, if you're working from a management P&L where operating expenses already exclude those four items, EBITDA = Revenue − Operating Expenses.

How do you calculate EBITDA margin?+

EBITDA margin = EBITDA ÷ Revenue, usually shown as a percentage. A 25% EBITDA margin means 25 cents of every revenue dollar is left over as EBITDA before financing costs, taxes, and non-cash depreciation and amortization charges.

Why do people use EBITDA instead of net income?+

EBITDA strips out financing decisions (interest), tax jurisdiction and strategy (taxes), and non-cash accounting charges (depreciation and amortization) — leaving a figure that's often easier to compare across companies with different capital structures, tax situations, or asset bases. It's widely used in valuation, lending covenants, and deal-making, though it's not a substitute for net income or free cash flow.

How is EBITDA different from net income?+

Net income is the true bottom line after every expense, including interest, taxes, depreciation, and amortization. EBITDA adds those four items back, so it's always greater than or equal to net income (assuming positive add-backs) and reflects operating performance before financing, tax, and non-cash accounting effects.

What units does the EBITDA Calculator use?+

All dollar inputs and outputs (net income, interest, taxes, depreciation, amortization, revenue, operating expenses, EBITDA) are in the same currency unit — entered in whole dollars. The EBITDA margin is unitless, shown as a percentage of revenue.

What's the difference between EBITDA and EBIT?+

EBIT (Earnings Before Interest and Taxes) adds back only interest and taxes to net income, leaving depreciation and amortization as expenses. EBITDA goes one step further and adds back depreciation and amortization too, so EBITDA is always greater than or equal to EBIT for the same company.

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Financials

EBITDA

EBITDA Margin

EBITDA Margin

EBITDA Build-Up

How to Use This Calculator

Pick a starting point

Enter your figures

Check the build-up and margin

Formula & Methodology

Key Terms Explained

Real-World Examples

Small manufacturer

Comparing efficiency

Management P&L only

Understanding the EBITDA Calculator

How the EBITDA Calculator works

Inputs and what they mean

Limits and edge cases

Frequently Asked Questions

Get a branded PDF of your results

📋 Financials

📊 EBITDA

🧮 EBITDA Margin

📊 EBITDA Margin

🧭 EBITDA Build-Up

How to Use This Calculator

Pick a starting point

Enter your figures

Check the build-up and margin

Formula & Methodology

Key Terms Explained

Real-World Examples

Understanding the EBITDA Calculator

How the EBITDA Calculator works

Inputs and what they mean

Limits and edge cases

Frequently Asked Questions

Get a branded PDF of your results

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