EBITDA Calculator
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EBITDA$400,000.00
EBITDA Margin40.00%
Operating Profit (EBIT)$310,000.00
The EBITDA Calculator strips financing and accounting choices out of profit so you can compare a company's core operating performance. Starting from net income, it adds back interest, taxes, depreciation, and amortization to reveal earnings before those items. Dividing EBITDA by revenue gives the EBITDA margin, a percentage that lenders, buyers, and analysts use to gauge how much of every sales dollar becomes operating cash earnings.
Formula
EBITDA = net income + interest + taxes + depreciation + amortization; margin = EBITDA / revenue × 100
- net income
- Bottom-line profit after all expenses, interest, and taxes
- interest
- Interest expense on debt added back to remove financing effects
- taxes
- Income taxes added back to remove jurisdiction effects
- D and A
- Depreciation and amortization, the non-cash charges added back
How it works
- Enter net income from the bottom of the income statement, then the interest, taxes, depreciation, and amortization recorded for the same period.
- The calculator adds those four items back to net income to produce EBITDA, undoing the effects of financing, tax policy, and non-cash asset write-downs.
- Enter total revenue to compute the EBITDA margin as a percentage, and the tool also reports operating profit (EBIT) by leaving depreciation and amortization in.
Worked example
A firm earns $200,000 net income with $50,000 interest, $60,000 taxes, $70,000 depreciation, $20,000 amortization, on $1,000,000 revenue.
- EBITDA = 200,000 + 50,000 + 60,000 + 70,000 + 20,000 = $400,000.
- Margin = 400,000 / 1,000,000 × 100 = 40%.
- Operating profit (EBIT) = 400,000 - 70,000 - 20,000 = $310,000.
EBITDA of $400,000, a 40% margin, and $310,000 of operating profit.
Frequently asked questions
- Why add interest and taxes back to net income?
- Interest reflects how a company is financed and taxes reflect where it operates, neither of which measures operating performance. Adding them back lets you compare two businesses on the strength of their operations alone.
- What is a good EBITDA margin?
- It varies widely by industry, but a margin above 15% is often considered healthy, and software or services firms can exceed 30%. Capital-heavy or low-margin sectors run much lower, so always compare within an industry.
- How is EBITDA different from EBIT?
- EBIT (operating profit) adds back only interest and taxes, leaving depreciation and amortization as expenses. EBITDA goes one step further and removes those non-cash charges too, which this calculator shows alongside EBITDA.
- Is EBITDA the same as cash flow?
- No. EBITDA ignores changes in working capital, capital expenditures, and actual taxes paid, so it overstates cash available. It is a profitability proxy, not a substitute for a real cash flow statement.