EBITDA Calculator

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.