EBITDA Calculator
Enter operating profit, amortization and depreciation to see EBITDA and how much of it comes from non-cash charges.
Updated
EBITDA Calculator
Our EBITDA Calculator finds earnings before interest, taxes, depreciation and amortization by adding the two non-cash charges back to operating profit. Enter operating profit (EBIT), amortization and depreciation and EBITDA appears as you type, with the total of the add-backs and their share of the result. It suits business owners, investors, lenders and finance students who want a quick measure of operating earnings before financing, tax and accounting write-downs.
Quick answer
EBITDA is operating profit + depreciation + amortization: 260,000 + 45,000 + 15,000 = 320,000.
- Operating profit (EBIT): revenue minus all operating costs, before interest and taxes.
- Depreciation: the yearly write-down of physical assets such as machines and vehicles.
- Amortization: the same write-down for intangible assets such as software, patents and licences.
- Can be negative: when the operating loss is larger than the two add-backs.
What Is EBITDA?
EBITDA stands for earnings before interest, taxes, depreciation and amortization. It starts from operating profit and adds back the two charges that spread the cost of long-lived assets over the years, because neither one is a cash payment in the period:
= Operating profit
+ Depreciation
+ Amortization
The result is a rough picture of the earnings the operations generate before any decisions about debt, tax or asset accounting. EBITDA is not defined by accounting standards (it is a non-GAAP measure), so companies may calculate it slightly differently and many publish an "adjusted" version that removes one-off items.
How to Calculate EBITDA
= 260,000 + 45,000 + 15,000
= 320,000
- Find operating profit. Take operating income (EBIT) from the income statement, such as 260,000.
- Find depreciation and amortization. They are often in the cash flow statement: here 45,000 and 15,000.
- Add them up. 260,000 + 45,000 + 15,000 = 320,000 is EBITDA.
- Check the add-back share (optional). 60,000 ÷ 320,000 × 100 = 18.75% of EBITDA comes from non-cash charges.
EBITDA From Net Income
When you only have the bottom of the income statement, work back up: add interest and taxes to net income to get EBIT, then add depreciation and amortization:
| Step | Value |
|---|---|
| Net income | 171,000 |
| + Interest expense | 24,000 |
| + Income taxes | 65,000 |
| = EBIT | 260,000 |
| + Depreciation and amortization | 60,000 |
| = EBITDA | 320,000 |
With revenue of 1,600,000 this business has an EBITDA margin of 320,000 ÷ 1,600,000 = 20%, against an EBIT margin of 16.25%.
EBITDA Examples
| Operating profit + D&A | EBITDA |
|---|---|
| 260,000 + 60,000 | 320,000 |
| −30,000 + 60,000 | 30,000 |
| 500,000 + 0 | 500,000 |
| −90,000 + 30,000 | −60,000 |
The second business has an operating loss, but its depreciation of 52,000 and amortization of 8,000 turn EBITDA positive: typical of a young firm with heavy equipment. The third, a consultancy with almost no fixed assets, has the same EBITDA as EBIT. The fourth loses money even before the non-cash charges.
Why EBITDA Is Not Cash Flow
EBITDA is often called a cash flow proxy, but several real cash payments sit outside it. A rough walk from EBITDA to cash for the same business:
| Item | Value |
|---|---|
| EBITDA | 320,000 |
| − Capital spending | 70,000 |
| − Rise in working capital | 20,000 |
| − Interest paid | 24,000 |
| − Taxes paid | 65,000 |
| = Cash left | 141,000 |
Less than half of EBITDA reaches the bank here. Businesses that must keep replacing equipment can look healthy on EBITDA while struggling for cash, so read it next to the cash flow statement.
What EBITDA Is Used For
- Valuation. Enterprise value ÷ EBITDA (EV/EBITDA) prices a business apart from its debt: 2,560,000 ÷ 320,000 = 8 times.
- Borrowing limits. Lenders cap net debt ÷ EBITDA; net debt of 960,000 is 3 times EBITDA.
- Interest cover. EBITDA ÷ interest shows debt service room: 320,000 ÷ 24,000 ≈ 13.33 times.
- Comparing companies. Firms with different asset ages, depreciation methods, debt and tax rates can be compared more evenly.
- Margin tracking. EBITDA ÷ revenue gives the EBITDA margin (20% above).
Common Mistakes
- Adding interest twice. Operating profit is already before interest; only add interest back when starting from net income.
- Starting from net income with D&A only. That skips interest and taxes and understates EBITDA.
- Double counting depreciation. Take it once, even if part of it sits inside cost of goods sold.
- Mixing in one-off items. Gains on asset sales or restructuring costs belong in adjusted EBITDA, clearly labelled.
- Treating EBITDA as cash. Capital spending, working capital, interest and tax still have to be paid.
Key Terms
- EBIT
- Earnings before interest and taxes, also called operating profit.
- Depreciation
- Spreading the cost of a physical asset over its useful life.
- Amortization
- Spreading the cost of an intangible asset over its useful life.
- EBITDA margin
- EBITDA as a percentage of revenue.
- Adjusted EBITDA
- EBITDA with one-off or unusual items removed.
- EV/EBITDA
- Enterprise value divided by EBITDA, a valuation multiple.
How to Use the EBITDA Calculator
- Enter operating profit. Type operating profit (EBIT) for the period, such as 260,000. A loss can be entered as a negative number.
- Enter amortization and depreciation. Type the amortization and depreciation charges for the same period, such as 15,000 and 45,000. Enter 0 if there are none.
- Read and copy the result. EBITDA appears as you type, with the working, the total of depreciation and amortization, their share of EBITDA and a bar comparing EBIT with the add-backs. Press Copy to copy it, or Clear or Esc to start again.
Example: operating profit of 410,000, amortization of 12,000 and depreciation of 38,000. EBITDA is 460,000, from 410,000 + 12,000 + 38,000.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate EBITDA?
Add depreciation and amortization to operating profit. EBITDA = operating profit (EBIT) + depreciation + amortization.
What is the EBITDA for operating profit of 260,000, amortization of 15,000 and depreciation of 45,000?
It is 320,000. 260,000 + 15,000 + 45,000 = 320,000.
How do you calculate EBITDA from net income?
Add interest, taxes, depreciation and amortization to net income. For example, 171,000 + 24,000 + 65,000 + 60,000 = 320,000.
What is the difference between EBIT and EBITDA?
EBITDA adds depreciation and amortization back to EBIT. EBIT of 260,000 with 60,000 of depreciation and amortization gives EBITDA of 320,000.
Can EBITDA be negative?
Yes. When the operating loss is larger than depreciation and amortization, EBITDA is negative. For example, −90,000 + 30,000 = −60,000.
Is EBITDA the same as cash flow?
No. EBITDA ignores capital spending, changes in working capital, interest and taxes, so the cash a business keeps is usually well below its EBITDA.
Why do analysts use EBITDA?
It compares operating earnings across companies with different debt, tax rates and asset accounting, and it is the base of common ratios such as EV/EBITDA and net debt to EBITDA.
Is the EBITDA Calculator free?
Yes. It is completely free, needs no sign-up, and can be used as many times as you like.
Sources
- Wikipedia. Earnings before interest, taxes, depreciation and amortization.
- Corporate Finance Institute. What is EBITDA? Definition, formula and examples.
- Wall Street Prep. EBITDA primer: formula and calculator.
- WallStreetMojo. EBITDA: formula and examples.
Try our EBITDA Calculator to see operating earnings before non-cash charges in seconds.