What’s your earnings before deductions?

EBITDA Calculator

Calculate your Earnings Before Interest, Taxes, Depreciation, and Amortization

EBITDA Analysis

EBITDA Summary

$500,000

Sales / Revenue

$170,000

EBITDA

$150,000

EBIT

34.0%

EBITDA Margin

How EBITDA is calculated

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Starting from net income and adding back $20,000 in interest, $30,000 in taxes, $15,000 in depreciation, and $5,000 in amortization gives an EBITDA of $170,000 on $500,000 in sales — a margin of 34.0%. Stripping out financing costs and non-cash charges this way makes it easier to compare your core operating profitability against other businesses, regardless of how each is financed or depreciates its assets. At 34.0%, EBITDA margin is strong — though what counts as "strong" varies a lot by industry, since asset-light businesses like software naturally run higher margins than capital-intensive ones.

Earnings & Revenue

Net Income (NI)

Sales / Revenue

Financial & Tax

Non-cash Charges

What is EBITDA?

EBITDA measures the financial performance of a business by removing interest, taxes, depreciation, and amortization from earnings. This shows how the business performs based on its core operations.

EBITDA is a financial metric used to measure a company’s operating profit from all forms of business operations within a specific period and indicates the business’s ability to generate cash from operations.

For example, a business has $100,000 in net income, $20,000 in interest expense, and $30,000 in taxes. Add those together and you get $150,000 of EBIT. Add back $15,000 in depreciation and $5,000 in amortization, and EBITDA comes to $170,000.

EBITDA allows for operating performance comparison between two businesses without regard to any differences in their financing structures or accounting methods.
EBITDA calculator formula: EBITDA equals net income plus interest, taxes, depreciation and amortization, with a worked example

How to calculate EBITDA using this calculator?

The calculator requires several inputs from your income statement. Each value represents a different part of your business revenue or expenses.

1. Net income

Net income is your profit after every expense, interest payment, and tax has already been deducted from revenue. You will find it at the bottom of your income statement. If you haven’t calculated that figure yet, start with a net income calculator, since EBITDA works backward from it.

2. Sales / Revenue

Total sales or revenue for the period. This number is not part of the EBITDA formula itself – it is used afterward to calculate your EBITDA margin (EBITDA as a percentage of revenue).

3. Interest and taxes

Interest expense is what the business paid to borrow money: loan interest, credit line fees, and similar costs. Taxes are income taxes paid or accrued for the period. Both values are typically listed separately on the income statement.

4. Depreciation and amortization

When the business buys things like machines, vehicles, or equipment, they lose value over time. This loss in value is called Depreciation.

The business also buys things that you cannot touch, like software licenses or patents, and these things also lose value over time. This loss in value is called Amortization.

Depreciation and amortization are important because they help the business understand how/what value it is losing over time.

After entering these inputs, the calculator adds net income, interest, taxes, depreciation, and amortization together to find your EBITDA.

What does EBITDA represent?

EBITDA represents the amount of income generated by a company through its normal operations without considering interest, taxes, depreciation, and amortization.

EBITDA is also presented as a % of total revenue. It is referred to as EBITDA margin. It is calculated by: (EBITDA/ Revenue) x 100 = EBITDA Margin.

To illustrate, if EBITDA is $170,000 and revenue is $500,000, the calculation is (170,000/500,000) x 100 = 34%. EBITDA margins in industries are different.

The EBITDA margins of manufacturers tend to be high compared to other businesses, and retail businesses tend to have lower margins. A low EBITDA margin indicates that the company has had to spend more in its operations than it earns.

The greater the EBITDA margin, the more the business can meet its operating expenses and invest in expansion. EBITDA margins are used by investors and lenders to compare the efficiency of various companies.

Frequently asked questions

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. A business with $100,000 net income, $20,000 interest, $30,000 taxes, $15,000 depreciation, and $5,000 amortization has EBITDA of $170,000.

Starting from net income, add back interest, taxes, depreciation, and amortization — four items that reflect financing and accounting choices rather than core operating performance. The result is a proxy for cash operating profit, before capital structure and non-cash accounting decisions.

EBITDA strips out differences in debt levels, tax jurisdictions, and depreciation policy, making it easier to compare operating performance across companies that are otherwise structured very differently. It's widely used in valuation multiples (like EV/EBITDA) for that reason — but it's not a substitute for net income or free cash flow, since it ignores real costs like interest and capital expenditure.

EBITDA margin = EBITDA ÷ Revenue, expressed as a percentage. It varies widely by industry — software businesses often run 20-40%+ given low cost of goods sold, while retail and restaurants typically run much lower, often single digits to low teens. Compare your margin against similar businesses in your own industry, not a universal benchmark.

No. Gross profit is revenue minus cost of goods sold, full stop. EBITDA starts from net income and adds back interest, taxes, depreciation, and amortization, which means it also accounts for operating expenses that gross profit never touches — salaries, rent, marketing, and the rest. A business can show strong gross profit but weak EBITDA if those operating costs are eating most of it.