EBITDA Calculator

Calculate EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) from income statement data. EBITDA is the standard measure of operational profitability used in business valuation.

📊 Finance💼 EBITDA = Net Income + Interest + Taxes + D&A
Net income / net profit ($)
Interest expense ($)
Income tax expense ($)
Depreciation expense ($)
Amortization expense ($)
Please enter valid values.

Formula & Reference

VariableFormulaUnits
EBITDA CalculatorEBITDA = Net Income + Interest + Taxes + D&A$

Step-by-Step Examples

Example 1
Small Business

Net income $500k, interest $50k, taxes $120k, depreciation $80k, amortization $30k.

  • EBITDA = $500k+$50k+$120k+$80k+$30k = $780,000
  • At 5x EBITDA valuation multiple = $3.9M enterprise value
✓ EBITDA $780k
Example 2
Capital-Heavy Company

Net income $200k, interest $100k, taxes $80k, depreciation $400k, amortization $0.

  • EBITDA = $200k+$100k+$80k+$400k = $780k
  • High depreciation from equipment inflates EBITDA vs net income significantly
✓ EBITDA $780k despite modest net income
Example 3
Loss-Making but High EBITDA

Net loss -$200k, interest $50k, taxes $0, depreciation $500k, amortization $150k.

  • EBITDA = -$200k+$50k+$0+$500k+$150k = $500k
  • Positive EBITDA despite net loss is common in asset-heavy or growth businesses
✓ EBITDA $500k despite net loss

Real-World Applications

📊
Business Valuation
EBITDA multiple is the most common private market valuation methodology.
🏦
M&A
Buyers and sellers center acquisition discussions on EBITDA multiples.
💼
Loan Covenants
Lenders use Debt/EBITDA ratio for credit assessment and loan covenants.
💰
Investors
EBITDA strips out financing and accounting choices for operational comparison.

Common Mistakes to Avoid

⚠️
Using EBITDA as a substitute for cash flow

EBITDA is not cash flow. It ignores capex, working capital changes, and debt service. Free cash flow is a better measure of actual cash generation.

⚠️
Overlooking adjusted EBITDA add-backs

M&A processes often use 'adjusted EBITDA' adding back one-time costs, owner compensation above market, and non-cash items. The adjustments are crucial to valuation negotiations.

⚠️
Applying standard multiples without industry context

EBITDA multiples vary from 3-5x for service businesses to 15-25x+ for high-growth software. Never apply a multiple without comparable industry data.

Frequently Asked Questions

What is EBITDA used for? ▾
Primarily for business valuation (enterprise value = EBITDA x multiple), comparison of operational performance across companies with different capital structures, and loan covenant compliance.
What are typical EBITDA multiples? ▾
Varies widely by industry and growth rate: Manufacturing 4-7x, professional services 5-8x, healthcare 8-12x, software/SaaS 8-20x, high-growth tech 20x+.
What is the difference between EBITDA and EBIT? ▾
EBIT = Earnings Before Interest and Taxes (includes D&A). EBITDA adds back Depreciation and Amortization, removing the impact of asset investment timing.
Why is EBITDA criticized? ▾
Warren Buffett famously dislikes it because it pretends depreciation is not a real cost. For capital-intensive businesses, ignoring capex/depreciation significantly overstates true earnings.
What is adjusted EBITDA? ▾
EBITDA further adjusted for non-recurring items: one-time legal costs, restructuring charges, above-market owner salary, stock compensation, and other non-cash or non-recurring items.

Related Business Calculators

📊 Profit Margin📊 Operating Margin💼 Business Valuation📊 Return on Assets📊 Rule of 40