EBITDA Calculator converts net income into EBITDA and adjusted EBITDA, then measures both against revenue. The detailed bridge shows exactly how interest, taxes, depreciation, amortization, and optional non-recurring adjustments affect the result.
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EBITDA formulas
EBITDA = EBIT + Depreciation + Amortization
Adjusted EBITDA = EBITDA + Eligible Non-recurring Adjustments
EBITDA Margin = EBITDA ÷ Revenue × 100%
Symbols and definitions
| Symbol | Meaning | Purpose |
|---|---|---|
| NI | Net income after interest and tax | Starting point |
| EBIT | Earnings before interest and taxes | Operating income |
| D&A | Depreciation and amortization | Non-cash charges added back |
| EBITDA | Earnings before interest, taxes, depreciation and amortization | Core result |
| R | Revenue | Margin denominator |
Worked example
Suppose a company reports net income of $100,000, interest expense of $20,000, taxes of $30,000, depreciation of $15,000, and amortization of $5,000. EBITDA is $170,000. If revenue is $500,000, the EBITDA margin is 34%. Adding a documented $10,000 non-recurring adjustment produces adjusted EBITDA of $180,000 and an adjusted margin of 36%.
How to use EBITDA responsibly
EBITDA helps compare operating performance before differences in financing, tax environments, and certain non-cash accounting charges. It is often used in company valuation, covenant analysis, acquisition screening, and period-to-period performance reviews.
It is not cash flow and does not measure all economic costs. Capital expenditures, debt principal payments, working-capital changes, taxes, and interest still matter. Asset-heavy companies can require substantial reinvestment even when EBITDA appears strong.
Adjusted EBITDA guidance
Adjustments may include unusual restructuring costs, one-time legal settlements, acquisition expenses, or owner-specific costs in some private-company analyses. Recurring costs should not be removed merely to improve the result. For a credible comparison, apply the same policy across periods and disclose each item.
Common mistakes
- Treating EBITDA as the same thing as operating cash flow.
- Adding depreciation or amortization twice.
- Entering tax payments instead of the income-tax expense for the same accounting period.
- Removing recurring operating costs as “one-time” adjustments.
- Comparing adjusted EBITDA figures that use different definitions.
- Ignoring capital expenditure and working-capital requirements.
Frequently asked questions
Is EBITDA the same as gross profit?
No. Gross profit subtracts COGS from revenue. EBITDA also reflects operating expenses other than interest, tax, depreciation, and amortization.
Is EBITDA the same as EBIT?
No. EBITDA adds depreciation and amortization back to EBIT.
Can EBITDA be negative?
Yes. A negative result means the applicable earnings base remains below zero even after the specified add-backs.
Why use EBITDA margin?
The margin scales EBITDA by revenue, making trends and similarly structured companies easier to compare.
Does EBITDA include owner salary?
Normal compensation is generally an operating expense. A valuation professional may normalize clearly unusual owner compensation when calculating adjusted EBITDA.
How to use this EBITDA Calculator
Enter net income, interest, taxes, depreciation, amortization, optional adjustments and revenue. Click Calculate EBITDA to reveal the report. Download a PDF or Excel-compatible file, or select Reset to restore the example values.
EBITDA Calculator planning guide
Use the EBITDA Calculator for consistent period comparisons, valuation screening and covenant planning. Document every adjustment and avoid removing recurring costs merely to improve adjusted EBITDA. Compare each EBITDA Calculator report with verified financial statements.
EBITDA is a non-GAAP measure and is not cash flow. Review the SEC guidance on non-GAAP measures when relevant. This EBITDA Calculator is educational and does not replace accounting, investment or lending advice. Run the EBITDA Calculator with consistent classifications, and compare every EBITDA Calculator result with audited or verified records.
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Educational estimate: Confirm classifications against the company’s statements and applicable reporting rules. This tool is not accounting, investment, tax, or lending advice.