EBITDA Calculator
Use this EBITDA calculator to rebuild earnings before interest, taxes, depreciation and amortization from net income and compare operating performance.
What it does
The EBITDA Calculator rebuilds earnings before interest, taxes, depreciation and amortization from a company's reported net income. It adds those four items back so you can compare core operating performance across firms with different debt, tax and accounting profiles.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
EBIT = Net income + Interest + Taxes; EBITDA = EBIT + Depreciation + Amortization
How it works
Starting from net income, the tool adds back interest and taxes to reach EBIT (operating profit), then adds depreciation and amortization to reach EBITDA. The chart shows how each layer builds on the last.
Where it is used
- Comparing operating performance across companies with different capital structures
- Estimating cash-generating capacity before financing and accounting choices
- Feeding a valuation multiple such as EV / EBITDA
Worked example
A company reports $500,000.00 of net income with $50,000.00 of interest and $100,000.00 of taxes, giving EBIT of …. Adding $80,000.00 of depreciation and $20,000.00 of amortization lifts the figure to an EBITDA of ….
What the EBITDA calculator does
The EBITDA calculator rebuilds a company's earnings before interest, taxes, depreciation and amortization from reported net income. Adding back the four items the measure excludes shows how much a business earns from its core operations before the effects of financing, tax, and accounting for past investment.
Two firms in the same industry can report very different net incomes because one carries more debt or sits in a higher tax jurisdiction. Removing those factors lets you compare the underlying businesses, which is why EBITDA is so widely quoted in company analysis.
How EBITDA is built up
The calculation has two steps, and the tool shows both.
First it reaches EBIT, or earnings before interest and taxes. Starting from net income, it adds back the interest a company pays on its debt and the taxes it pays on its profit. The result is operating profit before financing and tax.
Second it adds back depreciation and amortization to reach EBITDA. Depreciation spreads the cost of physical assets such as machinery and buildings across their useful lives; amortization does the same for intangible assets such as software, patents or acquired goodwill. Neither is cash leaving the business this period, so adding them back moves the figure closer to operating cash generation.
EBIT equals net income plus interest plus taxes, and EBITDA equals EBIT plus depreciation plus amortization.
Why the add-backs matter
Interest reflects how a company is financed, not how well it operates: a firm loaded with debt reports lower net income than an identical debt-free firm. Taxes depend on jurisdiction, past losses and one-off items. Depreciation and amortization depend on past capital spending and accounting policy, so a company that invested heavily years ago carries large charges today without any new cash going out.
Lenders, private equity buyers and analysts use EBITDA when sizing up a company or setting a valuation multiple because it removes all four.
How to use the calculator
- Enter net income, the bottom-line profit.
- Enter the interest expense.
- Enter the tax charge.
- Enter depreciation, then amortization. If your accounts combine the two, put the total in one field and leave the other at zero.
All five figures come from the income statement. The tool returns EBIT, total depreciation and amortization, and EBITDA, with a bar chart showing how the layers stack up. Change any figure, such as a heavier depreciation charge, to see the effect.
Reading the result
Divide EBITDA by revenue to get an EBITDA margin, which lets you compare profitability across companies of very different sizes. Divide enterprise value by EBITDA to get a valuation multiple, one of the most common yardsticks in mergers and acquisitions.
A wide gap between EBIT and EBITDA means depreciation and amortization are large relative to profit, typical of capital-intensive businesses and of firms that have made large acquisitions. A narrow gap points to an asset-light model with little being written down.
The limits of EBITDA
EBITDA is not cash you can spend. Interest has to be paid, tax is a cash cost, and depreciation, although non-cash today, reflects assets that wear out and eventually need replacing with real money.
A business with heavy equipment needs continual capital spending just to stand still, and EBITDA ignores that entirely, so critics argue it can flatter capital-intensive companies. Warren Buffett's well-known scepticism about the measure rests on this point: it treats a future cash cost as if it did not exist.
Read EBITDA alongside free cash flow, net income and capital expenditure, each of which answers a different question. Compared with peers in the same industry and read next to cash flow, it is a useful gauge of operating strength; read alone, it can mislead.
This article is general information only and is 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.
Frequently asked questions
How does the EBITDA calculator work?
What is the difference between EBIT and EBITDA?
Why do investors add back depreciation and amortization?
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