EBITDA Calculator

EBITDA is earnings before interest, taxes, depreciation and amortization. From net income: EBITDA = net income + interest + taxes + depreciation + amortization. With $100,000 net income, $20,000 interest, $30,000 taxes and $20,000 of D&A, EBITDA is $170,000.

How to use the EBITDA calculator

1. Choose whether you start from net income or from operating income (EBIT).
2. Enter the amounts from the income statement and cash flow statement.
3. Add revenue for the EBITDA margin, and debt and cash for the leverage ratio.

EBITDA formulas

• EBITDA = net income + interest + taxes + depreciation + amortization
• EBITDA = operating income (EBIT) + depreciation + amortization
• EBITDA margin = EBITDA ÷ revenue × 100%
• Net debt / EBITDA = (debt − cash) ÷ EBITDA

What EBITDA is used for

EBITDA approximates operating cash profit before financing decisions, tax rates and non-cash charges, so it is used to compare companies with different debt levels and asset ages, and in valuation multiples such as EV/EBITDA.

Limits of EBITDA

• It ignores capital spending, which can be large for asset-heavy businesses.
• It is not a measure under U.S. GAAP, so companies may adjust it differently.
• Interest and taxes are real costs; EBITDA is not the same as cash flow.

EBITDA practice quiz: 10 questions

Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.

Frequently asked questions

How do you calculate EBITDA?

Add interest, taxes, depreciation and amortization back to net income, or add depreciation and amortization to operating income (EBIT).

What is a good EBITDA margin?

It depends on the industry. Software firms often exceed 30%, while retailers and restaurants are often below 10–15%.

Is EBITDA the same as cash flow?

No. It ignores interest, taxes, capital spending and changes in working capital, all of which affect cash.

Where do I find depreciation and amortization?

On the cash flow statement under operating activities, or in the notes to the income statement.

What does net debt to EBITDA show?

Roughly how many years of EBITDA it would take to pay off net debt; lenders often watch levels above 3–4×.

Sources

• Corporate Finance Institute: What is EBITDA?
• OpenStax Principles of Accounting, Volume 1: Financial Accounting

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