Calculate EBITDA (earnings before interest, taxes, depreciation and amortization) two ways: bottom-up from net income, or top-down from revenue minus cost of sales and operating expenses. You also get EBIT, EBITDA margin, adjusted EBITDA and net debt to EBITDA.
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Method
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Optional in this method; needed for margins.
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Profit after all expenses, interest and taxes (can be negative).
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SG&A, rent, salaries, R&D — without depreciation & amortization.
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Net of interest income if you prefer.
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Optional
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Positive for one-time costs, negative for one-time gains.
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For the net debt / EBITDA ratio.
Enter your values to see the result.
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How to use the EBITDA Calculator
Choose a method: start from net income (bottom-up) or from revenue (top-down).
Enter the figures from your income statement: net income, interest, taxes, depreciation and amortization, or revenue, COGS and operating expenses.
Add revenue in the net income method to see the EBITDA margin.
Optionally add one-time adjustments for adjusted EBITDA and net debt for the leverage ratio.
Read EBITDA, EBIT and margins, and check the step-by-step bridge.
EBITDA formulas
There are two equivalent ways to get to EBITDA from an income statement:
Bottom-up: EBITDA = Net income + Interest + Taxes + Depreciation + Amortization
Top-down: EBITDA = Revenue − Cost of goods sold − Operating expenses (excluding D&A)
Example: net income $210,000 + taxes $65,000 + interest $45,000 = EBIT of $320,000. Adding depreciation of $60,000 and amortization of $20,000 gives EBITDA of $400,000. On revenue of $2,000,000 that is a 20% EBITDA margin. The top-down route gives the same result: $2,000,000 − $1,100,000 − $500,000 = $400,000.
Profit measures compared
Measure
Formula
What it tells you
Gross profit
Revenue − COGS
Profit on the product itself
EBITDA
EBIT + D + A
Operating profit before non-cash charges and financing
EBIT
Net income + interest + taxes
Operating profit after wear and tear of assets
EBT
EBIT − interest
Profit before income tax
Net income
EBT − taxes
The bottom line for shareholders
Limits of EBITDA
EBITDA is popular because it compares operating performance across companies with different debt levels, tax situations and asset ages. But it ignores the real cost of replacing equipment (capital expenditures), changes in working capital and the interest that must be paid. A capital-heavy business can show strong EBITDA and still burn cash, so look at free cash flow alongside it.
Frequently asked questions
What is the EBITDA formula?
EBITDA = net income + interest + taxes + depreciation + amortization. Equivalently, EBITDA = revenue − cost of goods sold − operating expenses (excluding depreciation and amortization), or EBIT + depreciation + amortization.
What is the difference between EBITDA and EBIT?
EBIT (earnings before interest and taxes, often close to operating income) still deducts depreciation and amortization. EBITDA adds them back. So EBIT = EBITDA − depreciation − amortization, and EBITDA is always at least as large as EBIT.
How do I calculate EBITDA margin?
EBITDA margin = EBITDA ÷ revenue × 100. A company with $2 million of revenue and $400,000 of EBITDA has a 20% EBITDA margin. Margins differ a lot by industry, so compare with similar companies.
What is adjusted EBITDA?
Adjusted EBITDA adds back (or subtracts) items considered one-time or non-operating, such as restructuring costs, legal settlements, owner perks or gains on asset sales. It is widely used in deal valuation, but there is no standard definition, so always check what was adjusted.
What is net debt to EBITDA?
Net debt ÷ EBITDA shows roughly how many years of current EBITDA it would take to repay debt net of cash. Lenders use it in loan covenants. Acceptable levels depend on the industry and the stability of earnings.
Is EBITDA the same as cash flow?
No. EBITDA ignores changes in working capital, capital expenditures, interest and taxes actually paid, so it can be much higher than the cash a business generates. Use it as a measure of operating profitability, not as free cash flow.
Is EBITDA a GAAP measure?
No. EBITDA is a non-GAAP (and non-IFRS) metric. Public companies that report it must reconcile it to net income, and definitions can vary between companies.
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