EBITDA Calculator
Earnings Before the Accounting Choices Get Involved
Two companies can post wildly different net income figures while running nearly identical operations — one might depreciate its equipment aggressively, carry more debt, or operate in a higher-tax jurisdiction. EBITDA strips out those differences by adding interest, taxes, depreciation, and amortization back onto earnings, leaving a figure that reflects operating performance rather than financing structure or accounting policy. It's the number analysts reach for first when comparing companies of different sizes, capital structures, or tax situations.
The Formula
This calculator supports two equivalent starting points, depending on which figures you have on hand:
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
From Operating Income:
EBITDA = Operating Income + Depreciation + Amortization
Both routes produce the same result when the inputs are drawn from the same income statement — operating income already excludes interest and taxes, so only depreciation and amortization need to be added back.
A Worked Example
Take a company with net income of $250,000, interest expense of $40,000, taxes of $60,000, depreciation of $80,000, and amortization of $20,000:
| Line item | Amount |
|---|---|
| Net Income | $250,000 |
| + Interest | $40,000 |
| + Taxes | $60,000 |
| + Depreciation | $80,000 |
| + Amortization | $20,000 |
| EBITDA | $450,000 |
Where EBITDA Is Used
- Valuation multiples — EV/EBITDA is one of the most common multiples used to compare acquisition targets across industries with different capital intensity.
- Loan covenants — lenders frequently set debt-to-EBITDA limits as a condition of a credit facility, since it approximates cash available to service debt.
- Cross-company comparison — because it removes financing and tax effects, EBITDA lets you compare an all-equity company against a heavily leveraged one on operating terms alone.
- Trend tracking — management teams often track EBITDA quarter over quarter as a proxy for operating momentum, separate from one-off financing or tax events.
How to Use This Calculator
- Choose the calculation mode: "From Net Income" or "From Operating Income," depending on which figures are available.
- For the net income route, enter Net Income, Interest Expense, Taxes, Depreciation, and Amortization.
- For the operating income route, enter Operating Income, Depreciation, and Amortization.
- Select Calculate to see the resulting EBITDA along with the full addition breakdown.
Related Calculations
Pair this with the Operating Margin Calculator to see profitability as a percentage of revenue, or the Interest Coverage Ratio Calculator to check how comfortably earnings cover debt payments.