EBITDA Calculator
Earnings before interest, taxes, depreciation and amortization, built up from net income, with EBIT and both margins. A non-GAAP measure, and labelled as one.
Result
EBITDA: $250,000.00
A non-GAAP measure from the figures you enter. It is not cash flow and not a valuation.
- EBIT
- $190,000.00
- Note
- EBITDA is not defined by accounting standards. It leaves out real costs, the wear on assets and the interest and tax a business must pay.
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Results are arithmetic estimates based on the assumptions you enter, not accounting, tax, investment or lending advice. Forecasts can be wrong and important decisions should be checked with a qualified adviser. Read the full disclaimer
How to use the EBITDA Calculator
- Enter net income from the income statement, and the interest expense and income tax expense deducted to reach it.
- Enter depreciation and amortization, usually found in the cash flow statement or the notes.
- Optionally enter revenue for the EBITDA and EBIT margins.
The formula
EBIT = net income + interest expense + income tax expenseEBITDA = EBIT + depreciation + amortizationEBITDA margin = EBITDA ÷ revenueWhy people use it
EBITDA strips out how a business is financed (interest), where and how it is taxed, and how its past purchases are spread over time (depreciation and amortization). That makes businesses with different debt and asset histories easier to compare on their day-to-day earnings. The same stripping out is why it can flatter a business that borrows heavily or needs constant reinvestment.
What the diagram shows
EBITDA as one bar built up from net income, the interest and tax added back, and depreciation and amortization. A part that is negative, such as a loss, is left out of the bar.
With your numbers
- EBIT = $120,000.00 + $30,000.00 + $40,000.00 = $190,000.00
- EBITDA = $190,000.00 + $50,000.00 + $10,000.00 = $250,000.00
Quick reference
A non-GAAP measure from the figures you enter. It is not cash flow and not a valuation.
| Example | EBITDA |
|---|---|
| Profit of 120,000, revenue 1,000,000 | $250,000.00 |
| A net loss with a tax benefit | $50,000.00 |
| No debt, no revenue given | $16,500.00 |
| Asset-heavy: large depreciation | $545,000.00 |
| Acquired intangibles: large amortization | $480,000.00 |
| Net interest income | $130,000.00 |
Common questions about the EBITDA Calculator
- Is EBITDA a GAAP measure?
- No. It is not defined by US GAAP or IFRS. The US Securities and Exchange Commission treats it as a non-GAAP measure: a company that reports it must show how it gets there from net income, and a figure that removes anything else has to be called something different, such as adjusted EBITDA.
- Why start from net income rather than operating income?
- Because that is how EBITDA is defined: earnings, meaning net income, before interest, taxes, depreciation and amortization. Operating income already leaves out some items that net income includes, such as gains on selling assets, so adding depreciation to operating income gives a slightly different number.
- What does EBITDA leave out?
- Interest, tax and the cost of the assets the business uses up, all of which are real. A business with heavy equipment can show strong EBITDA while its machines wear out. EBITDA is also not cash flow: it ignores money tied up in stock and receivables and the cash spent replacing equipment.
- Can EBITDA be positive when there is a loss?
- Yes. A net loss of 80,000 with 60,000 of interest, a 20,000 tax benefit and 90,000 of depreciation gives EBITDA of 50,000. The business covers its running costs before financing and wear, but not after them.