EBITDA Calculator
Calculate EBITDA from revenue, operating expenses, depreciation, and amortization. See operating income, D&A added back, and EBITDA margin.
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EBITDA
$450,000
Operating Income
$350,000
D&A Added Back
$100,000
EBITDA Margin
45.0%
How EBITDA Is Calculated
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's core operating profitability before financing and accounting decisions. This calculator uses the simple revenue-based formula: revenue minus operating expenses (which gives operating income), then adds back depreciation and amortization.
If you're starting from net income instead of revenue and operating expenses, use the alternate formula: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Both formulas arrive at the same figure — the revenue-based version is just more convenient when you already know operating expenses, while the net-income version is useful when working from a completed income statement.
Example
A company with $1,000,000 in revenue, $650,000 in operating expenses, $80,000 in depreciation, and $20,000 in amortization has an operating income of $350,000. Adding back the $100,000 of depreciation and amortization gives an EBITDA of $450,000 — an EBITDA margin of 45%.
Common Use Cases
- Comparing operating profitability between companies with different capital structures.
- Valuing a business for acquisition using an EV/EBITDA multiple.
- Assessing a company's cash-generating ability before financing and tax effects.
- Evaluating loan covenants that reference EBITDA thresholds.
FAQs
Why add back depreciation and amortization?
Depreciation and amortization are non-cash accounting charges that spread the cost of assets over time. Adding them back highlights the cash-generating power of operations, independent of how assets were financed or written down.
Is EBITDA the same as cash flow?
No. EBITDA ignores working capital changes, capital expenditures, interest, and taxes — all of which affect actual cash flow. It's a profitability proxy, not a substitute for a cash flow statement.
What is a good EBITDA margin?
It varies widely by industry. Software and services companies often see 20-40%+ margins, while capital-intensive or low-margin retail businesses may run in the single digits to low teens.