EBITDA calculator
- Formula
- Net income + interest + income taxes + D&A (≈ operating income + D&A with no other non-operating items)
EBITDA = Net income + Interest + Taxes + Depreciation + AmortizationA loss is a negative number.
EBITDA
$1,080,000
How it’s worked out
- 1EBIT$610,000 + $90,000 + $180,000$880,000
- 2EBITDA$880,000 + $140,000 + $60,000$1,080,000
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
Worked on a real month of books
Northwind Traders, Inc., September 2026 (accrual basis, USD), the month the free course is taught on. No interest and no income tax in the first month; depreciation on the van is the only add-back. Every figure is read off the course's posted ledger, not typed.
- 1Net incomeFrom the income statement$2,550
- 2Add back depreciationVan, one month$500
- 3EBITDA$2,550 + $500$3,050
See the statements these come from in the course.
How to read it
EBITDA builds up from net income by adding back interest, income taxes, depreciation and amortization. It approximates operating earnings before financing, tax and the cost of assets.
It is useful for comparing companies with different capital structures. It is misleading for a business that must keep spending on equipment.
Common mistakes
- Adding back interest income instead of subtracting it.
- Treating EBITDA as cash flow — it ignores working capital and capex.
Questions
- Is EBITDA a GAAP measure?
- No. It is a non-GAAP measure; a public company reporting it must reconcile it to net income under SEC Regulation G.
- What is adjusted EBITDA?
- Adjusted EBITDA also removes items management considers non-recurring, such as stock-based compensation or restructuring. The adjustments are a choice, which is why they must be disclosed.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- EBITDA vs operating incomeOperating income is profit after all operating expenses, depreciation and amortization included; EBITDA adds depreciation and amortization back, so it is always at least as large and ignores what the company's assets cost to use up.Compare
- EBIT vs EBITDAEBIT is earnings before interest and taxes; EBITDA is EBIT with depreciation and amortization added back — the difference between them is exactly the period's D&A.Compare
- CapEx vs OpExCapital expenditure buys an asset that will serve for more than a year and is depreciated over that life; an operating expense is consumed in the period and hits the P&L in full immediately.Compare
- EBIT calculatorEBIT is a profitability metric, calculated as Net income + Interest expense + Income tax expense.Calculator
- Net debt to EBITDA calculatorLeverage ratio is a leverage and coverage metric, calculated as Net debt ÷ EBITDA (or total debt ÷ EBITDA).Calculator
- Operating margin calculatorOperating margin is a profitability metric, calculated as Operating income ÷ Revenue.Calculator
- EBITDAEBITDA is a profitability metric, calculated as Net income + interest + income taxes + D&A (≈ operating income + D&A with no other non-operating items).Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.