EBITDA Calculator
Calculate EBITDA and your EBITDA margin from either net income or operating profit. See exactly how the add-backs build up, and understand how EBITDA differs from EBIT and net profit.
Written by the CalcBundle Research & Editorial Team · Reviewed by the Quality Review Team · Transparent formulas · results are estimates, not advice. · Updated
EBITDA
Enter your figures to calculate EBITDA.
Quick Answer
What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a company's operating profitability by removing financing costs, tax obligations, and non-cash accounting charges. Two formulas produce the same result: Method A: Net Income + Interest + Taxes + Depreciation + Amortization; Method B: Operating Profit + Depreciation + Amortization. EBITDA margin = EBITDA ÷ Revenue × 100. Investors and acquirers use EBITDA multiples to value businesses — a company with $500,000 EBITDA in an industry where businesses sell at 4× EBITDA is worth approximately $2 million. Strong EBITDA margins vary by sector: software companies typically run 20–40%, manufacturing businesses 10–15%. EBITDA is not a GAAP metric and is not the same as cash flow — it excludes capital expenditures, changes in working capital, and debt repayments.
What is EBITDA?
EBITDA — Earnings Before Interest, Taxes, Depreciation and Amortization — is a widely used measure of a company's operating profitability. By removing financing costs (interest), tax, and two non-cash accounting charges (depreciation and amortization), it aims to show how much profit the core business generates before those factors.
How do you calculate EBITDA?
There are two standard build-ups, and they produce the same result:
- Method A (from net income): Net Income + Interest + Taxes + Depreciation + Amortization
- Method B (from operating profit): Operating Profit + Depreciation + Amortization
The calculator lets you pick whichever method matches the figures you have. Operating profit itself is Revenue − COGS − Operating Expenses.
Why businesses use EBITDA
EBITDA makes it easier to compare companies with different tax positions, debt levels and asset bases. It is also the basis for many valuation multiples — see the company valuation and business valuation calculators — and is often used in loan covenants and acquisition pricing.
EBITDA vs net profit vs EBIT
Net profit is the bottom line after everything. EBIT (operating profit) adds back interest and tax but still charges depreciation and amortization. EBITDA adds those back too. So the order from largest to smallest is usually EBITDA ≥ EBIT ≥ net profit.
Important: EBITDA is not cash flow
EBITDA ignores real cash needs — interest payments, taxes, working capital and capital expenditure. A business can show healthy EBITDA and still run short of cash. To model actual cash movements, use the cash flow calculator. For the money the business truly keeps, use the business profit calculator.
Example
A company with $1,000,000 revenue, $400,000 COGS and $300,000 of operating expenses has a $300,000 operating profit. Adding back $10,000 depreciation and $5,000 amortization gives EBITDA of $315,000 — a 31.5% EBITDA margin.
Frequently asked questions
What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. It strips out financing and accounting decisions to show a company's underlying operating profitability, which makes it useful for comparing businesses.
How do you calculate EBITDA?
Two ways give the same answer. From net income: Net Income + Interest + Taxes + Depreciation + Amortization. From operating profit: Operating Profit + Depreciation + Amortization. This calculator supports both methods.
What is a good EBITDA margin?
It varies widely by industry. Software businesses can exceed 30–40%, while retail and hospitality often run in the high single digits to low teens. What matters most is the trend and how you compare to peers in your sector.
Is EBITDA the same as profit?
No. EBITDA ignores interest, taxes, depreciation and amortization, so it is higher than net profit. It shows operating performance but not what the business actually keeps after financing and tax.
What is the difference between EBITDA and EBIT?
EBIT (Earnings Before Interest and Taxes) is operating profit — it still includes depreciation and amortization. EBITDA adds those two non-cash charges back, so EBITDA is always equal to or higher than EBIT.
Why do investors and lenders rely on EBITDA?
Because it lets them compare the core operating performance of very different companies on a level footing. Two firms may have wildly different debt loads, tax situations and depreciation schedules — all of which distort net profit — yet EBITDA strips those away to reveal how well each underlying business actually trades. It is also the anchor for many valuation multiples and loan covenants, so a buyer pricing an acquisition or a bank sizing a facility often starts from EBITDA rather than net profit.
What are the main criticisms of EBITDA?
The sharpest criticism is that EBITDA can flatter a business by ignoring real costs. Depreciation reflects the genuine wearing-out of assets that will eventually need replacing, so adding it back can make a capital-intensive company look far healthier than its cash reality. EBITDA also excludes interest and tax, which are unavoidable, and says nothing about working capital. This is why experienced analysts treat EBITDA as one useful lens, not the whole picture, and always pair it with a look at actual cash flow and capital expenditure.
What is adjusted EBITDA?
Adjusted EBITDA takes standard EBITDA and adds back one-off, non-recurring or owner-specific items — a legal settlement, a one-time relocation cost, or above-market owner pay — to show normalised, ongoing earnings. It is common in acquisitions because it aims to reveal what the business will earn under a new owner in a typical year. Like SDE add-backs, though, adjusted EBITDA is scrutinised closely, because aggressive or poorly-documented adjustments can inflate the figure and erode a buyer's trust.
Related calculators
Business Profit
Turn revenue and expenses into gross, operating and net profit with clear margins and a visual breakdown.
Business Valuation
Estimate your company's value with revenue, EBITDA and SDE multiples, adjusted for growth and risk.
Company Valuation
Estimate an established company's value with revenue, EBITDA and SDE multiples.
SDE
Calculate Seller's Discretionary Earnings and an indicative business value.
Sources & methodology
- Formula
- EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization (or Operating Profit + D&A)
- Reviewed
- September 2026
Primary sources
- SEC Non-GAAP Financial Measures GuidanceSEC Compliance & Disclosure Interpretation on non-GAAP measures including EBITDA.
- CFA Institute: EBITDACFA curriculum definition of EBITDA and its role in financial analysis.
- U.S. GAAP Income Statement Standards (ASC 225)FASB Accounting Standards Codification — Presentation of Financial Statements: Income Statement.
Calculation methodology is documented on our methodology page. Reviewed by the CalcBundle Quality Review Team.
Disclaimer. This calculator provides estimates for informational purposes only. Results are based on the information you enter and the assumptions used by the calculator. Actual financial, tax, business valuation, lending, marketplace or investment outcomes may differ. Consider consulting a qualified professional for decisions involving significant amounts of money.