# EBITDA Calculator

Calculate EBITDA from net income, interest, taxes, depreciation, and amortization. Measure operating performance and compare companies. Free calculator.

## What this calculates

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.

## Inputs

- **Net Income** ($) — The company's bottom-line profit after all expenses.
- **Interest Expense** ($) — min 0 — Total interest paid on debt during the period.
- **Income Taxes** ($) — min 0 — Total income tax expense for the period.
- **Depreciation** ($) — min 0 — Total depreciation expense for the period.
- **Amortization** ($) — min 0 — Total amortization expense for the period.
- **Revenue (optional)** ($) — min 0 — Enter revenue to calculate EBITDA margin.

## Outputs

- **EBITDA** — formatted as currency — Earnings Before Interest, Taxes, Depreciation, and Amortization.
- **EBIT** — formatted as currency — Earnings Before Interest and Taxes (operating income).
- **EBITDA Margin** — formatted as percentage — EBITDA as a percentage of revenue (only if revenue is provided).

## Details

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.

## Frequently Asked Questions

**Q: What does EBITDA stand for?**

A: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a company's operating performance by adding back non-operating and non-cash expenses to net income, providing a clearer view of core profitability.

**Q: Why is EBITDA important?**

A: EBITDA is important because it allows apples-to-apples comparison of companies regardless of their capital structure, tax situation, or depreciation policies. It is used extensively in business valuations (EV/EBITDA multiples), loan covenants, and management performance evaluation. Most M&A transactions use EBITDA-based multiples for pricing.

**Q: What is a good EBITDA margin?**

A: EBITDA margins vary widely by industry. Software companies often have margins of 30-50%, manufacturing companies 10-20%, and retail businesses 5-15%. Compare a company's EBITDA margin to its industry peers rather than using an absolute benchmark. Consistently improving margins over time is generally a positive signal.

**Q: What is the difference between EBITDA and EBIT?**

A: EBIT (Earnings Before Interest and Taxes) does not add back depreciation and amortization, so it accounts for the cost of asset wear and tear. EBITDA adds back these non-cash charges. EBIT is sometimes called operating income and is closer to true economic profit, while EBITDA is closer to operating cash flow.

---

Source: https://vastcalc.com/calculators/finance/ebitda
Category: Finance
Last updated: 2026-04-21