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EBITDA Calculator

Find a business's EBITDA and EBIT, two common measures of operating profit, from net income or operating income. Add revenue to see the margins too.

Level: Grades 6–7

Printable worksheet

EBITDA Calculator

Know the answer you need? Pick an input to work backward.

Inputs
Start from

The final profit line of the income statement. Enter a loss as a negative number.

Negative if the company earned more interest than it paid.

Negative for a tax benefit.

Result

EBITDA

$450,000.00

EBITDA is $450,000.00: operating income of $350,000.00 plus $100,000.00 of depreciation and amortization, an EBITDA margin of 22.5%.

EBIT (operating income)
$350,000.00
Depreciation and amortization
$100,000.00
EBITDA margin
22.5%
EBIT margin
17.5%

See the step-by-step solution ↓

Step-by-step solution

  1. Add interest and income tax back to net income, so loans and taxes no longer count. This gives EBIT (operating earnings)

    $250,000.00+$40,000.00+$60,000.00=$350,000.00

  2. Add depreciation and amortization back to EBIT, since they are paper charges, not cash. This gives EBITDA

    $350,000.00+$80,000.00+$20,000.00=$450,000.00

  3. Divide EBITDA by revenue to see how much of each sales dollar it is. That is the EBITDA margin

    $450,000.00$2,000,000.00×100=22.5%

  4. Do the same with EBIT (operating income) to get the EBIT margin

    $350,000.00$2,000,000.00×100=17.5%

Test yourself

20 quick questions built from this calculator's formula: work out results, predict what happens when an input changes, and work backward from an answer. Every answer comes with the working.

Please note: Results are estimates for planning and comparison. Lenders, banks, and tax authorities may round differently or include fees not modeled here, so confirm figures with your provider before deciding.

What this calculator does

See how much profit a business makes from its day-to-day operations, before loans, taxes and some accounting charges. That figure is called EBITDA: earnings before interest, taxes, depreciation and amortization. It removes how the business is paid for (interest on its debt) and where and how it's taxed.

It also removes depreciation and amortization. Those are charges on paper, not cash going out, that spread the cost of past purchases over several years. What's left is a rough picture of the profit the core business makes. That makes it easier to compare companies with different amounts of debt or older and newer equipment.

This calculator builds EBITDA in either of the two usual ways. Start from net income, and it adds back interest and taxes to reach EBIT (earnings before interest and taxes). Then it adds depreciation and amortization. Or start directly from operating income, which is EBIT. Enter revenue as well to see the EBITDA margin and EBIT margin. Margins show the profit as a share of sales, so you can compare businesses of different sizes.

Where it's used

Why this math matters outside the classroom:

  • Building from net income. Net income of $50,000 plus $10,000 interest, $15,000 taxes and $25,000 depreciation and amortization gives EBITDA of $100,000.
  • EBITDA margin. EBITDA of $100,000 on $500,000 of revenue is a 20% EBITDA margin.
  • Comparing companies. Analysts compare operating results of firms with different debt levels and tax situations by adding those items back.
  • Business valuation. Buyers of small businesses often quote a price as a multiple of EBITDA, so the figure must be calculated first.

How to use it

  1. Choose whether to start from net income or from operating income (EBIT).
  2. Enter the figures from the same period's income statement: net income, interest expense and income tax expense, or EBIT.
  3. Enter depreciation and amortization. You'll often find these in the cash flow statement.
  4. If you like, enter revenue for the period. Then read EBITDA, EBIT and the margins.

What the inputs mean

Net income
The profit after all expenses, interest and taxes. Enter a loss as a negative number.
Interest expense
Interest paid on borrowing during the period. If the business earned more interest than it paid, enter the difference as a negative number.
Income tax expense
Income tax expense as reported, which isn't always the cash paid. A tax benefit is negative.
Depreciation
The paper charge (no cash changes hands) for wearing out physical things such as equipment, vehicles and buildings.
Amortization
The same kind of charge for things you can't touch, such as software, patents or customer lists bought from another company.
Revenue (optional, for margins)
Total sales for the same period. Leave it blank if you only need the dollar figures.

Formula and method

EBIT = net income + interest expense + income tax expense
EBITDA = EBIT + depreciation + amortization
EBITDA margin = EBITDA ÷ revenue × 100
EBIT margin = EBIT ÷ revenue × 100

Net income is what remains after every expense. The calculator works upward from there. Adding back interest and taxes undoes the two costs that depend on borrowing and tax situation. That gives EBIT, earnings before interest and taxes. Adding back depreciation and amortization then undoes the accounting charges that use no cash this period. That gives EBITDA.

Each margin divides the profit figure by revenue and multiplies by 100 to make a percent.

If you already have operating income, it's usually close to EBIT, so you can skip the first step. Small differences can come from one-off gains or losses that sit outside operating income. For a careful comparison, use the same definition for every company or period.

Worked example

A company reports net income of $250,000, interest expense of $40,000, income tax expense of $60,000, depreciation of $80,000 and amortization of $20,000 on revenue of $2,000,000.

  1. EBIT: $250,000 + $40,000 + $60,000 = $350,000.
  2. EBITDA: $350,000 + $80,000 + $20,000 = $450,000.
  3. EBITDA margin: $450,000 ÷ $2,000,000 × 100 = 22.5%.
  4. EBIT margin: $350,000 ÷ $2,000,000 × 100 = 17.5%.

Result: EBITDA is $450,000, a 22.5% margin on revenue. EBIT is $350,000, a 17.5% margin.

Understanding the result

A higher EBITDA margin means more of each sales dollar is left after running the business day to day. Margins vary hugely by industry. So the most useful comparisons are with the same company over time, or with close competitors.

A big gap between EBITDA and EBIT points to a business with heavy depreciation, usually because it owns a lot of equipment or property. Those things will need replacing someday. So EBITDA can make companies that need costly equipment look better than they are.

Negative EBITDA means the business loses money even before loans, taxes and asset charges. That's a more serious warning than a negative net income alone.

Assumptions and limitations

  • All figures come from the same reporting period and the same set of accounts.
  • Interest and taxes are expenses, entered as positive numbers. Net interest earned or a tax benefit is negative.
  • No one-off items are adjusted. Figures aren't rounded along the way.
  • EBITDA isn't a measure of cash flow. It ignores changes in working capital (money tied up in stock and unpaid bills) and the cash spent on new equipment.
  • It isn't defined by accounting standards. So companies sometimes show adjusted versions that leave out other items. Those adjustments aren't modeled here.
  • The calculator doesn't value a business. It only works out the earnings figure and margins.

Frequently asked questions

What is the difference between EBIT and EBITDA?

EBIT is earnings before interest and taxes, which still subtracts depreciation and amortization. EBITDA adds those two charges back as well. So EBITDA is always at least as large as EBIT. The difference is exactly the depreciation and amortization for the period.

Why do analysts use EBITDA?

It lets you compare companies with different debt, tax situations and equipment ages on a similar footing, since those factors are removed. It's also a common starting point for estimating how much debt a business could handle.

Is EBITDA the same as cash flow?

No. It ignores spending on equipment and changes in stock and unpaid customer bills. It also ignores the interest and taxes that really must be paid in cash. Operating cash flow and free cash flow, from the cash flow statement, are better guides to the money a business actually brings in.

Where do I find depreciation and amortization?

Some income statements list them separately. If not, the cash flow statement usually shows them near the top of the operating section, added back. They're often combined into a single line.

How this calculator is checked

Method: Standard accounting definitions: EBIT = net income + interest + taxes; EBITDA = EBIT + depreciation + amortization; margin = figure ÷ revenue. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.

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