EBITDA Calculator
Calculate EBITDA quickly with our free tool. Enter net income, interest expense, taxes, depreciation, and amortization to determine a company's core operating earnings. Optionally provide revenue to see the EBITDA margin.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is widely used as a proxy for a company's operating cash flow because it strips out the effects of financing decisions (interest), tax jurisdictions (taxes), and non-cash accounting charges (depreciation and amortization). The formula is simple: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization.
EBITDA is especially useful for comparing companies across different industries, capital structures, and tax situations. For example, two companies with identical operations but different debt levels will have different net incomes but similar EBITDAs. It is also the basis for the EV/EBITDA valuation multiple, one of the most commonly used metrics in mergers and acquisitions.
However, EBITDA has limitations. It ignores capital expenditure requirements, which can be substantial in asset-heavy industries. It also does not account for changes in working capital. Critics like Warren Buffett have noted that depreciation is a real economic expense because assets must eventually be replaced. For a complete picture, consider EBITDA alongside free cash flow, net income, and other metrics.