Calculate your company's EBITDA by entering your net income, interest expense, taxes, depreciation, and amortization. You'll get your EBITDA value along with a breakdown showing how each component contributes to the final figure — useful for benchmarking operating performance.
EBITDA
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EBIT (Operating Profit)
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Total D&A Addback
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Implied Enterprise Value
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EBITDA is calculated by adding back interest expense, taxes, depreciation, and amortization to net income. The formula is: EBITDA = Net Income + Interest Expense + Taxes + Depreciation + Amortization. Alternatively, you can start from operating profit (EBIT) and add depreciation and amortization: EBITDA = Operating Profit + D&A.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a company's core operating profitability by stripping out non-operating costs and non-cash charges. It is widely used by investors, analysts, and lenders to compare companies across industries and capital structures without the distortion of financing decisions or accounting policies.
A 'good' EBITDA depends heavily on the industry. Generally, an EBITDA margin (EBITDA divided by revenue) above 10% is considered healthy for most sectors, while technology and software companies often exceed 20–30%. The absolute EBITDA figure matters less than how it compares to peers and how it trends over time.
An EBITDA multiple is a valuation metric that expresses a company's enterprise value as a multiple of its EBITDA (Enterprise Value / EBITDA). It is commonly used in mergers and acquisitions to benchmark valuations across comparable companies. For example, if a business has EBITDA of $1M and trades at a 5x multiple, its implied value is $5M.
No, EBITDA and gross profit are different. Gross profit is revenue minus the cost of goods sold (COGS), while EBITDA also deducts operating expenses such as selling, general, and administrative costs before adding back non-cash charges. EBITDA gives a fuller picture of operating performance than gross profit alone.
Net income can be significantly influenced by a company's capital structure (debt levels), tax jurisdiction, and accounting policies around depreciation. EBITDA removes these variables to allow a cleaner comparison of operational efficiency between companies, making it especially useful for cross-company or cross-industry analysis.
Both metrics serve different purposes. Net profit is important for shareholders because it reflects actual earnings after all costs. EBITDA is preferred by analysts and acquirers for comparing operational performance and estimating cash-generating ability before financing and accounting effects. Neither metric alone tells the full story; they are most useful together.
EBITDA ignores capital expenditures (CapEx), changes in working capital, and debt repayment obligations — all of which affect a company's real cash position. It can be misleading for capital-intensive businesses where depreciation represents a genuine economic cost. Critics like Warren Buffett have noted that EBITDA can overstate true earnings power when used without context.