EBITDA Calculator
- Net income
- Interest
- Taxes
- Depreciation
- Amortization
EBITDA is 20.0% of revenue. It shows operating cash earnings before financing, tax and non-cash charges, not cash in the bank.
How the EBITDA calculation works
Start from net income
Take the bottom line of your income statement for the period, for example $120,000.
Add back interest and taxes to get EBIT
$120,000 + $15,000 interest + $30,000 taxes = $165,000 EBIT, the profit from operations.
Add back depreciation and amortization
These are non-cash charges. $165,000 + $25,000 + $10,000 = $200,000 EBITDA.
Divide by revenue for the margin
$200,000 ÷ $1,000,000 revenue = a 20% EBITDA margin, which lets you compare businesses of different sizes.
Worked example. Net income of $120,000 plus $15,000 interest, $30,000 taxes, $25,000 depreciation and $10,000 amortization gives EBITDA of $200,000, a 20.0% margin on $1,000,000 of revenue.
EBITDA FAQ
What is EBITDA?
EBITDA stands for earnings before interest, taxes, depreciation and amortization. It is operating profit with the non-cash charges for depreciation and amortization added back, so it shows what the core business earns before financing, tax and asset-wear costs.
What is the EBITDA formula?
EBITDA = net income + interest + taxes + depreciation + amortization. You can also start from EBIT and add depreciation and amortization. In the example, $120,000 + $15,000 + $30,000 + $25,000 + $10,000 = $200,000.
How do you calculate the EBITDA margin?
EBITDA margin = EBITDA ÷ revenue × 100. $200,000 of EBITDA on $1,000,000 of revenue is a 20% EBITDA margin. Use revenue for the same period as the EBITDA figure.
What is a good EBITDA margin?
It depends on the industry. In NYU Stern's January 2026 data for US listed companies, EBITDA was 16.56% of sales across the total market, 15.65% for Business & Consumer Services, 19.47% for Restaurant/Dining, 10.11% for Retail (General) and 5.40% for Retail (Grocery and Food). Small private businesses can differ a lot, so a margin that rises over time matters more than any one benchmark.
What is the difference between EBIT and EBITDA?
EBIT is profit before interest and taxes. EBITDA also adds back depreciation and amortization, so it is always equal to or higher than EBIT.
What is the difference between EBITDA and net income?
Net income is the bottom line after every expense, including interest, income taxes, depreciation and amortization. EBITDA adds those four back, so a business with loans or a lot of equipment can show a much higher EBITDA than net income.
What is adjusted EBITDA?
Adjusted EBITDA also adds back one-time or non-operating items, such as a lawsuit settlement, a one-off moving cost or owner pay above market rate. There is no single official definition, so always check which adjustments were made.
Is EBITDA the same as cash flow?
No. EBITDA ignores capital spending, changes in working capital, loan principal and taxes paid in cash, all of which affect cash.
Why do buyers use EBITDA to value a business?
It compares operating earnings without the effect of how the business is financed or taxed, so businesses are often priced as a multiple of EBITDA. For US listed companies with positive EBITDA, the average EV/EBITDA multiple was 19.73× in NYU Stern's January 2026 data. Small private businesses usually sell for much lower multiples.
Sources: NYU Stern (Damodaran): Operating and net margins by industry, US, January 2026 · NYU Stern (Damodaran): Enterprise value multiples by sector, US, January 2026