EBITDA Calculator

EBITDA calculator for business profitability and EBITDA margin

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. In plain terms, it is a way to estimate how much profit a business generates from core operations before financing choices, tax effects, and certain non-cash accounting charges are considered. People often use EBITDA to compare performance across companies or across time, especially when the businesses have different debt levels, tax situations, or accounting policies for fixed assets and intangibles.

This EBITDA calculator is designed for normal users who want a quick, defensible number without needing a perfect set of statements. It gives you two common methods. If you have top-line sales and operating costs, use the “revenue and operating costs” method. If you are starting from a P&L bottom line, use the “net income adjustments” method. Both methods aim to land at the same concept, but they depend on what inputs you have available and how your accounts are structured.

Your result is shown alongside practical extras that help interpretation. Where possible, the calculator also shows EBITDA margin, which is EBITDA divided by revenue, expressed as a percentage. Margin is often more useful than the raw number when comparing businesses of different sizes. You will also see a quick breakdown that makes it clearer what drove the result, which helps you spot whether the figure is being pulled up by add-backs or supported by real operating performance.

Assumptions and how to use this calculator

• Depreciation and amortization are treated as add-backs. If you include D&A inside your operating expenses, you should avoid double counting by entering operating expenses excluding D&A where the calculator asks for it.
• Optional inputs default to zero. If you do not know depreciation, amortization, interest, or taxes, you can leave them blank and still get a result, but it will be less precise.
• Revenue is required for a margin. EBITDA margin is only calculated when revenue is provided and greater than zero.
• This is not “adjusted EBITDA.” The calculator does not automatically remove one-off items, owner salaries, unusual expenses, or non-recurring income. If you want an adjusted version, you must adjust the inputs first.
• EBITDA is not cash flow. The calculator does not account for working capital changes (inventory, receivables, payables) or capital expenditure, which can materially affect cash available.

Common questions

What does EBITDA actually tell me?

EBITDA is a quick proxy for operating earning power, before financing and taxes and before certain non-cash charges. It can be useful for comparing operational performance across periods, or for benchmarking against similar businesses. It is not a replacement for net profit, cash flow, or a full financial analysis.

Why can EBITDA be higher than net profit?

Net profit is after interest and taxes and typically includes depreciation and amortization. EBITDA adds back interest, taxes, and D&A, so it often ends up higher. That does not automatically mean the business is healthier. It just means you are looking at an earlier point in the income statement.

What if I do not know depreciation or amortization?

You can leave them blank. The calculator will treat them as zero and still compute EBITDA. If you want a more accurate figure, look for depreciation and amortization in your P&L, notes to the accounts, or management accounts. If you only have “depreciation” listed, enter it and leave amortization blank.

Is EBITDA margin a good metric?

It can be useful because it normalizes for business size, but it is easy to misuse. Margin can look strong even if the business is starved of cash due to working capital needs or heavy reinvestment. Use EBITDA margin as one lens, then sanity-check it against operating cash flow and capital spending patterns.

When should I avoid using EBITDA?

Be cautious for businesses with heavy capital expenditure, rapidly growing working capital needs, or significant lease and financing structures, because EBITDA can hide real cash requirements. Also be cautious when comparing businesses with very different accounting policies or when large “add-backs” are being used to make performance look better than it is.