EBITDA Calculator

EBITDA Calculator

Updated Aug 15, 2026 By Jehan Wadia

Introduction

This EBITDA calculator shows how much cash your business makes from its core operations. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It strips out costs that are not tied to running the business day to day, so you can see the real earning power.

You can pick one of two ways to find it. The Net Income Method starts at the bottom of your income statement. You take net income and add back interest, taxes, depreciation, and amortization. The Operating Profit Method starts with operating profit (EBIT) and adds back only depreciation and amortization. Both roads lead to the same place.

Add your revenue too, and the tool gives you your EBITDA margin. That is your EBITDA as a percent of sales. A higher margin means you keep more of each dollar you earn. Lenders, buyers, and investors look at this number a lot. To compare it with other profitability measures, try the Gross Profit Margin Calculator or the Margin Calculator.

The calculator does more than give one answer. It shows a full breakdown of each part, a step-by-step solution with the math, and a chart of how your EBITDA is built. You can enter losses too by using the ± button or typing a minus sign.

How to use our EBITDA Calculator

Enter a few numbers from your income statement, and the calculator shows your EBITDA, your total add-backs, and your EBITDA margin, plus a full breakdown and step-by-step math.

Formula Method: Pick how you want to work out EBITDA. Choose the Net Income Method (Bottom-Up) if you start from your bottom line. Choose the Operating Profit Method (Top-Down) if you start from EBIT.

Net Income: Type your profit after all costs, interest, and taxes. If you had a loss, tap the ± button or type a minus sign.

Interest Expense: Type what you paid in interest on loans and other debt for the period. If you are still building a repayment schedule, the Business Loan Calculator and Loan Interest Calculator can help you pin down the figure.

Taxes: Type the income tax expense shown on your income statement. The Corporation Tax Calculator and Effective Tax Rate Calculator are useful if you need to estimate it.

Depreciation: Type the depreciation cost for the period. This is the non-cash charge for wear on assets like machines, vehicles, and buildings. Use the Depreciation Calculator to work out the yearly amount.

Amortization: Type the amortization cost for the period. This is the non-cash charge that spreads out the cost of intangible assets like patents, software, or goodwill.

Operating Profit (EBIT): If you picked the Operating Profit Method, type your profit before interest and taxes. Use the ± button for an operating loss.

Revenue (optional): Type your total sales for the same period to see your EBITDA margin as a percent. Leave it blank to skip the margin.

Press Calculate to see your results, or press Reset to start over with the sample numbers.

What Is EBITDA?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It shows how much money a business makes from its main operations, before paying for loans and taxes, and before counting the drop in value of things it owns.

People use EBITDA to see how well a company runs day to day. It strips out costs that come from how a company is funded, where it is taxed, and how it records old assets. That makes it easier to compare two companies side by side.

The Two EBITDA Formulas

You can find EBITDA two ways. Both should give the same answer if your numbers are correct.

Net Income Method (Bottom-Up): EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Operating Profit Method (Top-Down): EBITDA = Operating Profit (EBIT) + Depreciation + Amortization

The bottom-up method starts at the last line of the income statement and adds costs back. The top-down method starts with operating profit, which already leaves out interest and taxes, so you only add back depreciation and amortization.

What Each Part Means

Net Income: The profit left after every expense is paid. A loss is a negative number.
Interest Expense: What the company pays to borrow money.
Taxes: Income taxes owed to the government.
Depreciation: The value a physical asset loses over time, like trucks or machines.
Amortization: The same idea, but for things you cannot touch, like patents or software.
Operating Profit (EBIT): Profit from normal business before interest and taxes. Start with the Gross Profit Calculator if you are building the income statement from the top.

Depreciation and amortization are non-cash costs. They lower profit on paper, but no cash leaves the bank. That is why they get added back.

EBITDA Margin

EBITDA margin shows EBITDA as a percent of revenue:

EBITDA Margin = (EBITDA ÷ Revenue) × 100

If a company earns $500,000 in revenue and has $175,000 of EBITDA, the margin is 35%. A higher margin means more of each sales dollar stays as operating earnings. Margins vary a lot by industry, so compare a company to others in the same field. Our Percentage Calculator is handy if you want to check the math by hand.

Why EBITDA Matters

Buying and selling companies: Many businesses are priced as a multiple of EBITDA, like 5x or 8x EBITDA. The Business Valuation Calculator and DCF Calculator take this further, and the WACC Calculator gives you the discount rate.
Loans: Banks often check debt divided by EBITDA to see if a company can handle more debt. The DSCR Calculator covers the related coverage ratio lenders ask for.
Comparing firms: It removes tax rates and debt levels, so you see core performance.
Tracking progress: Owners watch EBITDA year to year to spot growth or trouble. Pair it with the Year Over Year Growth Calculator or the CAGR Calculator for a longer view.

Limits to Keep in Mind

EBITDA is not cash flow. It ignores money spent on new equipment, changes in working capital, and real debt payments. A company can show strong EBITDA and still run out of cash. It also is not an official accounting measure under GAAP or IFRS, so definitions can differ between companies. Use EBITDA next to net income and cash flow, not instead of them. Project-level tools like the NPV Calculator, IRR Calculator, and Payback Period Calculator fill in the cash side of the picture.

Negative EBITDA

A negative result means operating losses are bigger than the non-cash add-backs. That is a warning sign. It often points to weak sales, high costs, or an early-stage business that is still spending more than it earns. Run the Break Even Calculator to see what sales volume you need to turn the corner, and check the ROI Calculator to test whether the spending is paying off.

Formulas used

EBITDA — Net Income Method (Bottom-Up)

\text{EBITDA} = \text{Net Income} + \text{Interest} + \text{Taxes} + \text{Depreciation} + \text{Amortization}

EBIT (intermediate step, Net Income Method)

\text{EBIT} = \text{Net Income} + \text{Interest} + \text{Taxes}

EBITDA — Operating Profit Method (Top-Down)

\text{EBITDA} = \text{Operating Profit (EBIT)} + \text{Depreciation} + \text{Amortization}

Total Add-Backs

\text{Add-Backs} = \text{EBITDA} - \text{Base Earnings}

EBITDA Margin

\text{EBITDA Margin} = \frac{\text{EBITDA}}{\text{Revenue}} \times 100\%

Frequently asked questions

Why do my two methods give different EBITDA answers?

They should match. If they do not, one of your numbers is off. Check that your operating profit (EBIT) really equals net income plus interest plus taxes. Other income, one-time gains, or non-operating items can create a gap.

Where do I find these numbers?

All of them come from your income statement. Net income is the last line. Interest and taxes have their own lines. Depreciation and amortization may sit inside operating expenses, or you can find them on the cash flow statement.

Should I type depreciation as a positive or negative number?

Type it as a positive number. The calculator adds it back for you. Only use the ± button when a value truly is negative, like a net loss or a tax refund.

Can I use monthly or quarterly numbers?

Yes. Just make sure every input covers the same time period. Mixing a yearly revenue with a monthly net income will give a wrong margin.

What is the difference between EBIT and EBITDA?

EBIT is profit before interest and taxes. EBITDA takes EBIT and also adds back depreciation and amortization. So EBITDA is always equal to or larger than EBIT.

What is a good EBITDA margin?

It depends on the industry. Software firms often top 30%. Grocery stores and construction may sit near 5% to 10%. Compare your margin to other companies in your field, not to the whole market.

What if depreciation and amortization are shown as one line?

Put the full amount in the Depreciation box and leave Amortization at zero. The total is what matters, so the result stays the same.

What is adjusted EBITDA?

Adjusted EBITDA adds back one-time or unusual costs, like a lawsuit payout, moving costs, or an owner's extra salary. Buyers often ask for it. To get it here, add those items to your net income first, then run the calculator.

Is EBITDA the same as cash flow?

No. EBITDA ignores new equipment purchases, loan payments, and changes in inventory or unpaid invoices. A company can have strong EBITDA and still be short on cash.

What happens if I leave the revenue box blank?

The calculator still gives you EBITDA and total add-backs. It just hides the EBITDA margin card, since margin needs revenue to work.

Why does it say revenue must be positive?

Margin divides EBITDA by revenue. If revenue is zero or negative, that math has no useful meaning, so the tool skips the percent and shows a warning instead.

Can EBITDA margin be more than 100%?

Almost never from normal operations. If you see that, you likely mixed up periods or typed revenue that is too small. Double-check your inputs.

How do I use EBITDA to value my business?

Multiply EBITDA by a market multiple for your industry. Many small firms sell for about 3x to 6x EBITDA. So $200,000 of EBITDA at 4x is roughly $800,000.

What if my taxes were a refund?

Enter it as a negative number using the ± button. A tax benefit lowers EBITDA instead of raising it, and the calculator handles that automatically.

Does this calculator work for any currency?

Yes. The math is the same for any currency. The screen shows a dollar sign, but you can read it as pounds, euros, or anything else, as long as all inputs use one currency.

Do I need to include interest income?

Only interest expense goes in the Interest box. Interest income is not an operating item, so most analysts leave it out of EBITDA or remove it from net income first.

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