EBITDA Calculator United States

What the EBITDA calculator does

The EBITDA calculator measures earnings before interest, taxes, depreciation and amortization, a widely used indicator of operating profitability. It starts from net income and adds back interest expense, income taxes, depreciation and amortization from your income statement, which removes the effects of financing, tax rules and past capital spending. It also divides EBITDA by revenue for the EBITDA margin, which makes companies of different sizes comparable.

Two companies with identical operations but different debt loads or tax situations can report very different net income and similar EBITDA, so analysts, lenders and buyers use it to compare businesses, especially in valuation and lending.

How EBITDA is built up

• EBIT = net income + interest + taxes, which removes the cost of debt and the tax charge.
• EBITDA = EBIT + depreciation + amortization, which removes the two main non-cash charges from earlier investment in assets.

Net income already has every expense subtracted, so adding back only these four items leaves operating costs such as wages, materials, rent and marketing in place.

EBITDA margin

EBITDA in dollars grows with company size, so the margin expresses it as a share of revenue. A 25 percent margin means the business turns a quarter of each revenue dollar into operating earnings before interest, taxes and non-cash charges.

Compare a company’s margin with its own history to see whether operating profitability is improving, and with direct competitors to see whether it runs leaner or heavier. Acceptable margins differ sharply between industries, so compare within a sector.

Where EBITDA is used

Buyers often price a company as a multiple of EBITDA. Lenders judge how easily a borrower can service debt with ratios such as debt to EBITDA. Managers track it to watch operating performance without the effect of financing and tax decisions. The calculator shows EBITDA, the EBITDA margin, EBIT, the EBIT margin and the net profit margin together, so you can see how much of the gap between operating and net income comes from interest, taxes and non-cash charges.

The limits of EBITDA

Because it adds back depreciation and amortization, EBITDA ignores the cost of maintaining and replacing the assets a business depends on. A company with heavy equipment can show strong EBITDA and still need large ongoing capital spending that never appears in the figure.

It also ignores changes in working capital, interest that must be paid and taxes that come due, so a business can post healthy EBITDA and still be short of cash. Use it alongside the cash flow statement and capital spending figures.

What you need to enter

• Total revenue.
• Net income.
• Interest expense.
• Income taxes.
• Depreciation.
• Amortization.

Use figures from the same period, a quarter or a full year. If depreciation and amortization are combined on your statement, enter the total in one field and leave the other at zero. Reported adjusted EBITDA often adds back further items such as restructuring charges or stock-based compensation; this calculator reports standard EBITDA from the four add-backs, which keeps it comparable across companies.

Reading your result

The output shows EBITDA, the EBITDA margin, EBIT and its margin, and the net profit margin. The chart breaks EBITDA into net income and the add-backs, which shows when a large share of EBITDA comes from add-backs instead of underlying profit. Treat the result as an analytical estimate and review the full financial statements before making decisions.

This is general information only and not financial advice.

About This EBITDA Calculator

Use this EBITDA calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.