Free EBITDA Calculator
Calculate your company's EBITDA to understand its core operating profitability and potential value.
Last Updated: 15 Jan 2026
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What is EBITDA?
EBITDA is an acronym that stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a widely used financial metric used to evaluate a company's operating performance. By stripping away non-operating expenses (like interest and taxes) and non-cash charges (like depreciation and amortization), EBITDA provides a clear view of the cash profit generated by the company's core business operations.
Investors and financial analysts often overlook simple Net Income in favor of EBITDA because it allows for easier comparison between companies with different capital structures, tax rates, and accounting policies. It is frequently used as a proxy for cash flow and is a key component in business valuation ratios (like EV/EBITDA).
Why Use Our EBITDA Calculator?
Instant Valuation
Quickly calculate the core operating profit needed for business valuation methods and investment analysis without complex spreadsheets.
Compare Performance
Normalize your earnings to benchmark against competitors or industry standards, regardless of their debt levels or tax situations.
Cash Flow Proxy
Get a quick estimate of the cash flow available to pay down debt or fund new investments before accounting adjustments.
Common Use Cases
Business Evaluation
Selling a Business
Most small and medium businesses are valued based on a multiple of their EBITDA. Knowing this number is critical for exit planning.
Seeking Investment
Investors want to see strong EBITDA margins to ensure the business is operationally healthy before they inject capital.
Financial Analysis
Debt Capacity
Lenders use EBITDA to determine how much debt a company can service (Debt/EBITDA ratio).
Operational Efficiency
Tracking EBITDA over time helps management see if core operations are becoming more or less efficient, independent of tax changes or capex cycles.
The EBITDA Formula
EBITDA = Net Income + Interest + Taxes + Depreciation + AmortizationTo calculate it manually:
- Start with Net Income found at the bottom of the income statement.
- Add back Taxes paid relative to that income.
- Add back Interest expense incurred on debt.
- Add back Depreciation (of tangible assets) and Amortization (of intangible assets), found on the Cash Flow Statement or operating notes.
Frequently Asked Questions
What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a widely used measure of a company's operating performance, focusing on the profitability of its core business operations by excluding the impact of capital structure, leverage, and non-cash expenses.
Why is EBITDA important?
EBITDA provides a clearer view of operating efficiency than net income because it removes factors that can vary widely between companies (like debt levels and tax rates). It is commonly used by investors and analysts to compare companies within the same industry and to estimate business value.
How is EBITDA calculated?
The standard formula is: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Alternatively, it can be calculated as Operating Income (EBIT) + Depreciation + Amortization.
Is higher EBITDA better?
Generally, yes. A higher EBITDA indicates that the company is generating more earnings from its core operations. However, EBITDA should not be viewed in isolation; it's important to also consider margin (EBITDA margin), cash flow, and net income.
What is the difference between EBITDA and Gross Profit?
Gross Profit is Revenue minus Cost of Goods Sold (COGS). EBITDA takes Gross Profit and subtracts Operating Expenses (SG&A) but adds back Depreciation and Amortization. EBITDA is a more comprehensive measure of overall operating profitability than Gross Profit.
Can EBITDA be negative?
Yes, a negative EBITDA generally indicates that a company has fundamental problems with profitability and cash flow at an operational level. However, many early-stage growth companies (startups) may have negative EBITDA while they invest heavily in growth.
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