This EBITDA calculator adds depreciation and amortization expenses back to operating profit. Use it to calculate earnings before interest, taxes, depreciation, and amortization for a reporting period, then assess operating performance alongside cash flow and other profitability measures.
EBITDA is not net income or cash flow. It excludes several expenses that still matter to a business’s financial health.
How to use the EBITDA calculator
Enter these three amounts from your financial records:
- Operating profit: Enter profit after operating expenses, including depreciation and amortization, but before interest and income taxes. Do not substitute revenue, gross profit, or net income.
- Amortization expense: Enter the amortization already deducted when calculating operating profit. This generally relates to intangible assets, such as acquired software or patents—not repayments of loan principal.
- Depreciation expense: Enter the depreciation already deducted when calculating operating profit. This generally relates to tangible assets, such as equipment, vehicles, and buildings.
Use amounts for the same reporting period and business scope. For example, do not combine annual operating profit with quarterly depreciation. The fields are labeled in dollars; enter all amounts on the same scale, converting figures reported in thousands or millions as needed. Enter zero if there is no relevant expense.
Depreciation and amortization may appear within cost of sales or other operating expenses rather than as separate income-statement lines. Check the financial-statement notes or accounting records, and add back only amounts included in the operating profit you entered.
EBITDA formula and worked example
The calculator uses the operating-profit method:
EBITDA = Operating profit + Amortization expense + Depreciation expense
For example, using the calculator’s default amounts:
| Item | Amount |
|---|---|
| Operating profit | $100,000 |
| Amortization expense | $9,000 |
| Depreciation expense | $3,000 |
| EBITDA | $112,000 |
$100,000 + $9,000 + $3,000 = $112,000
The $12,000 difference between operating profit and EBITDA represents depreciation and amortization added back. It is not additional revenue or cash received.
Can you calculate EBITDA from net income?
A common alternative formula starts with net income:
EBITDA = Net income + Income tax expense + Net interest expense + Depreciation + Amortization
This calculator does not accept net income, interest, or taxes directly. It uses operating profit instead. If net income includes other nonoperating gains or losses, those items must also be reconciled to operating profit for the two approaches to produce the same result.
EBITDA is also commonly expressed as EBIT + depreciation + amortization. EBIT and operating profit are often similar, but they can differ when nonoperating items are included. The EBIT calculator provides a related view of earnings before interest and taxes.
What does your EBITDA result mean?
- Positive EBITDA: Under this calculation, operating profit is positive after depreciation and amortization are added back. The business may still report a net loss or use more cash than it generates.
- Negative EBITDA: Operating profit remains negative even after those add-backs. Investigate revenue, pricing, operating costs, and any unusual expenses rather than treating the number as a complete diagnosis.
- Rising or falling EBITDA: Compare consistent periods and definitions. A change may reflect sales growth, cost changes, acquisitions, or a shift in the business—not necessarily improved efficiency.
There is no universal “good” EBITDA amount. A larger business will often have higher dollar earnings, so company size and the capital required to generate those earnings matter.
How to apply EBITDA without overstating it
EBITDA can help you track earnings trends, review an operating budget, or compare similar businesses with different financing and tax arrangements. For useful comparisons, use the same calculation method, comparable reporting periods, and businesses with similar activities.
Keep these limitations in view:
- It is not operating cash flow. EBITDA does not account for cash tied up in inventory or unpaid customer invoices, changes in supplier payments, or other working-capital movements.
- It excludes asset costs without eliminating them. Depreciation and amortization are added back, but equipment and other assets may still need maintenance or replacement. Review capital spending separately.
- It does not show cash available for debt repayment. Interest, taxes, capital expenditures, and loan principal payments can substantially reduce available cash.
- It is not automatically adjusted EBITDA. This calculator does not remove restructuring costs, stock-based compensation, or other proposed adjustments. If a company reports adjusted EBITDA, review its reconciliation before comparing it with this result.
For a budget or acquisition review, document where each input came from. A consistent reconciliation from operating profit to EBITDA makes changes easier to explain and reduces the risk of adding back the same expense twice.
Related measures for a fuller financial picture
- EBITDA margin divides EBITDA by revenue and expresses it as a percentage. It helps compare earnings relative to sales rather than comparing dollar amounts alone.
- An EBITDA multiple relates enterprise value to EBITDA. It can support valuation comparisons, but differences in growth, risk, and capital requirements still matter.
For additional perspectives, use the Enterprise Value Calculator to examine enterprise value or the Economic Value Added Calculator to consider performance after the cost of capital.
Build a calculator for your business audience
Financial advisers and business consultants can use Calcopolis to build a customized financial calculator for their websites—for example, letting prospects estimate how proposed cost savings could affect operating profit and EBITDA before requesting a consultation.