EBITDA Calculator
Calculate EBITDA and EBITDA margin from net income plus interest, taxes, depreciation, and amortization — or build it up from operating income.
How to use this tool
- Enter net income (or adjusted net income if you want adjusted EBITDA).
- Enter interest, taxes, depreciation, and amortization for the period.
- Enter revenue to compute the EBITDA margin.
- Read EBITDA, EBITDA margin, and total D&A.
Compute EBITDA the standard way: net income plus interest, taxes, depreciation, and amortization. Enter the five components plus revenue to get EBITDA and your EBITDA margin.
Formula
EBITDA = Net income + Interest + Taxes + Depreciation + Amortization
EBITDA margin = EBITDA ÷ Revenue × 100%
EBITDA adds back the four items in its name to net income, approximating operating cash earnings before financing and accounting choices. You can also build it up from operating income (EBIT) by adding back depreciation and amortization.
How it works
EBITDA — earnings before interest, taxes, depreciation, and amortization — strips out financing decisions (interest), tax regimes (taxes), and non-cash accounting charges (depreciation and amortization) to approximate a company's core operating profitability. Starting from net income, you add those four items back. The result is widely used to compare companies with different capital structures and tax situations, and as a base for valuation multiples.
EBITDA has well-known limits, which is why it is best read alongside other metrics. Because it excludes depreciation and amortization, it ignores the real cost of maintaining and replacing assets, so it overstates cash generation for capital-intensive businesses. It also excludes working-capital swings and interest that a leveraged company genuinely must pay. Treat EBITDA as a comparability tool and a starting point, not as free cash flow. This calculator adds back exactly the four named items; if you want adjusted EBITDA, add your one-off or non-recurring items to net income before entering it.
Reviewed by the AbraCalc Business Desk. Educational estimate only, not accounting or investment advice; follow your reporting standards for what counts as each line item.
Worked example
$200k net income with $200k of add-backs
- Depreciation + amortization = 40,000 + 30,000 = 70,000.
- EBITDA = 200,000 + 50,000 + 80,000 + 70,000 = 400,000.
- EBITDA margin = 400,000 ÷ 1,000,000 = 40.00%.
EBITDA = $400,000.00, EBITDA margin = 40.00%
EBITDA build-up from $200,000 net income
| Component | Amount | Running EBITDA |
|---|---|---|
| Net income | $200,000 | $200,000 |
| + Interest | $50,000 | $250,000 |
| + Taxes | $80,000 | $330,000 |
| + Depreciation | $40,000 | $370,000 |
| + Amortization | $30,000 | $400,000 |
Key terms
- EBITDA
- Earnings before interest, taxes, depreciation, and amortization — a proxy for operating profitability.
- EBITDA margin
- EBITDA as a percentage of revenue; a measure of operating efficiency.
- Depreciation
- The periodic, non-cash expensing of a tangible asset's cost over its useful life.
- Amortization
- The periodic, non-cash expensing of an intangible asset's cost over its useful life.
Frequently asked questions
- Why add back interest, taxes, depreciation, and amortization?
- Interest depends on how a company is financed, taxes depend on jurisdiction, and depreciation and amortization are non-cash accounting allocations. Removing them makes operating profitability more comparable across companies with different debt, tax, and asset profiles.
- Is EBITDA the same as cash flow?
- No. EBITDA ignores capital expenditure, working-capital changes, and the interest a leveraged company actually pays. It overstates cash generation for asset-heavy businesses, so use it as a comparability measure, not as free cash flow.
- What is a good EBITDA margin?
- It is industry-dependent. Software businesses can post very high EBITDA margins, while low-margin retail or distribution runs in the single digits. Compare against sector peers and watch the trend rather than a single absolute target.