EBITDA Calculator

Calculate Earnings Before Interest, Taxes, Depreciation, and Amortization from net income or operating profit figures to assess core business performance.

Total Revenue

Net Income

Interest Expense

Taxes

Depreciation

Amortization

Results

Enter values and click Calculate to see results

How to Use This EBITDA Calculator

Enter your net income

Start with the net income from your income statement. This is the bottom line profit after all expenses, interest, and taxes have been deducted.

Add back interest, taxes, depreciation, and amortization

Enter the interest expense, tax expense, depreciation, and amortization amounts from your financial statements. These are added back to net income to calculate EBITDA.

Enter revenue for margin calculation

Input total revenue to calculate the EBITDA margin percentage. This shows EBITDA as a percentage of sales, useful for comparing companies of different sizes.

EBITDA Margins by Industry

Industry	Typical EBITDA Margin	Good Margin	Excellent Margin
Software/SaaS	15-25%	25-35%	35%+
Retail	5-10%	10-15%	15%+
Manufacturing	8-15%	15-20%	20%+
Healthcare	10-20%	20-30%	30%+
Restaurants	5-10%	10-15%	15%+
Construction	3-8%	8-12%	12%+

Note: EBITDA margins vary significantly by industry. Compare your margin to industry peers, not to companies in different sectors.

Understanding EBITDA

What Is EBITDA?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a company operating performance without the effects of financing decisions, accounting choices, and tax environments. EBITDA approximates the cash flow generated by core business operations.

EBITDA Formula

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Alternatively, EBITDA = Operating Income (EBIT) + Depreciation + Amortization. Both methods should yield the same result when calculated correctly from the same financial statements.

EBITDA Margin

EBITDA margin equals EBITDA divided by revenue, expressed as a percentage. This metric allows comparison of operating profitability across companies of different sizes and in different tax jurisdictions. Higher margins indicate better operational efficiency.

When EBITDA Is Useful

EBITDA is particularly useful for comparing companies with different capital structures, tax situations, or depreciation policies. It is commonly used in valuation multiples (EV/EBITDA), leveraged buyout analysis, and assessing companies with significant non-cash charges.

EBITDA Analysis Tips

Compare Within Industries

EBITDA margins vary widely across industries. Software companies often have 30%+ margins while retailers may have 5-10%. Always compare a company EBITDA margin to its industry peers, not to companies in different sectors.

Watch for EBITDA Manipulation

Some companies present adjusted EBITDA that excludes legitimate expenses. Be skeptical of companies that add back stock-based compensation, restructuring costs, or other recurring expenses. Stick to standard EBITDA calculations for comparisons.

Consider Capital Expenditures

EBITDA ignores capital expenditures required to maintain operations. A company with high EBITDA but massive capex needs may not generate much free cash flow. Always consider capex when evaluating a business.

Track EBITDA Trends

Look at EBITDA over multiple periods. Growing EBITDA indicates improving operational performance. Declining EBITDA margins may signal competitive pressure, rising costs, or pricing problems. Trend analysis reveals more than a single period snapshot.

Frequently Asked Questions

What is a good EBITDA margin?

A good EBITDA margin depends on the industry. For most businesses, 10-20% is considered healthy. Software and technology companies often achieve 25-40% margins. Retail and restaurants typically have 5-15% margins. Compare your margin to industry averages for meaningful assessment.

Is EBITDA the same as operating cash flow?

No, EBITDA is not the same as operating cash flow. EBITDA ignores changes in working capital and does not account for capital expenditures. Operating cash flow from the cash flow statement includes working capital changes and is a more complete measure of cash generation.

Why do investors use EBITDA?

Investors use EBITDA because it allows comparison of operating performance across companies with different capital structures, tax rates, and depreciation policies. It is also used in valuation multiples and is a common metric in loan covenants and private equity deals.

What are the limitations of EBITDA?

EBITDA ignores capital expenditures, changes in working capital, interest expense, and taxes. It can make highly leveraged or capital-intensive businesses appear more profitable than they are. Warren Buffett famously criticized EBITDA, noting it ignores the cost of assets needed to run the business.

How is EBITDA different from EBIT?

EBIT (Earnings Before Interest and Taxes) includes depreciation and amortization, while EBITDA excludes them. EBIT equals operating income on most income statements. EBITDA = EBIT + Depreciation + Amortization. EBIT is closer to GAAP operating income.

Other Free Tools

Search tools