What does EBITDA mean?
Earnings before interest, taxes, depreciation and amortization. It is profit from running the business, before how it is financed, taxed or how old its equipment is.
EBITDA Calculator
EBITDA and EBITDA margin.
Enter net income.
EBITDA ignores interest, tax and equipment wear. Use it to compare, not as cash.
How it is worked out
- EBITDA = net income + interest + taxes + depreciation and amortization
- EBITDA = revenue − cost of goods sold − operating expenses (not counting D&A)
- EBITDA margin = EBITDA ÷ revenue
Example: Net income $80,000 + interest $10,000 + taxes $20,000 + depreciation $15,000 = EBITDA of $125,000, a 20.8% margin on $600,000 of revenue.
About the EBITDA Calculator
EBITDA and EBITDA margin, from net income up or from revenue down.
How to use this tool
- Choose a method: from net income up, or from revenue down.
- Enter the figures from your profit and loss for the same period.
- Read EBITDA, the EBITDA margin and operating profit.
Frequently asked questions
How is EBITDA calculated?
Net income + interest + taxes + depreciation and amortization. Or, from the top: revenue − cost of goods sold − operating expenses (not counting depreciation). Both give the same answer.
What is a good EBITDA margin?
It depends on the industry. Restaurants and retail often run at 5% to 15%, while software and services can be much higher. Compare yourself with businesses like yours.
Is EBITDA the same as cash flow?
No. It leaves out money spent on equipment, cash tied up in stock and unpaid invoices, interest and tax. A business can show healthy EBITDA and still run short of cash.
What is the difference between EBITDA and EBIT?
EBIT, or operating profit, takes depreciation and amortization off EBITDA. EBIT counts the wear on equipment; EBITDA does not.