EBITDA Calculator
Calculate EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) from net income or operating profit. Get EBITDA margin and business valuation using EV/EBITDA multiples.
EBITDA Formula
Method 1: Net Income + Interest + Taxes + Depreciation + Amortization
Method 2: Operating Income + Depreciation + Amortization
🧮 Financial Data
Formula: EBITDA = Net Income + Interest + Taxes + D&A
📊 Results
EBITDA
$800,000
📊 EBIT (Operating Income)
$700,000
EBITDA - D&A = $800,000 - $100,000
Calculation Breakdown
📊 Industry Benchmarks: EBITDA Margins & Valuation Multiples
| Industry | Typical EBITDA Margin | EV/EBITDA Multiple |
|---|---|---|
| Software / SaaS | 20-35% | 10-15x |
| Healthcare | 15-25% | 8-12x |
| Manufacturing | 10-20% | 5-8x |
| Retail | 5-10% | 4-7x |
| Real Estate | 30-50% | 10-15x |
| Restaurants | 10-15% | 4-6x |
| Professional Services | 15-25% | 5-8x |
| Construction | 5-15% | 4-6x |
| Transportation | 10-20% | 5-7x |
| E-commerce | 8-15% | 8-12x |
* Benchmarks are general guidelines and may vary based on company size, growth rate, market conditions, and other factors.
📈 Understanding EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures a company's operational profitability by excluding non-operational factors. It's widely used by investors, analysts, and business owners to evaluate financial performance.
Why EBITDA Matters
Company Comparisons: By removing interest, taxes, and non-cash expenses, EBITDA allows fair comparison between companies with different capital structures and tax situations.
Business Valuations: The EV/EBITDA multiple is one of the most common methods to value private companies and assess acquisition prices.
Cash Flow Proxy: EBITDA approximates operating cash flow, though it doesn't account for changes in working capital or capital expenditures.
EBITDA vs EBIT
EBIT (Operating Income) includes depreciation and amortization expenses, making it useful for capital-intensive businesses. EBITDA excludes these non-cash charges, providing a cleaner view of cash generation but potentially overstating profitability for asset-heavy companies.
📐 Key Formulas
EBITDA = NI + I + T + D + A
EBITDA = EBIT + D + A
Margin = EBITDA ÷ Revenue
EV = EBITDA × Multiple
📚 Key Terms
D&A: Depreciation & Amortization
EBIT: Operating Income
EV: Enterprise Value
Multiple: Valuation ratio
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Frequently Asked Questions
EBITDA can be calculated using two methods: Method 1 (from Net Income): EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Method 2 (from Operating Income): EBITDA = Operating Income + Depreciation + Amortization. Both methods yield the same result—the choice depends on which financial data you have available.
A 20% EBITDA margin means that for every $100 of revenue, the company generates $20 in EBITDA. This indicates strong operational efficiency. For context, software companies often achieve 20-35% EBITDA margins, while retail typically sees 5-10%. A 20% margin is generally considered healthy across most industries.
No, EBITDA and gross profit are different. Gross Profit = Revenue - Cost of Goods Sold (COGS). It only considers direct production costs. EBITDA goes further by also subtracting operating expenses (SG&A, R&D, etc.) but then adds back depreciation, amortization, interest, and taxes. EBITDA provides a broader view of operational profitability.
EBITDA measures how much money a business makes from its core operations before accounting for: Interest (financing costs), Taxes (which vary by location), Depreciation (wear on physical assets), and Amortization (spreading intangible asset costs). It's useful for comparing companies across different tax jurisdictions and capital structures.
A 'good' EBITDA margin varies by industry: Software/SaaS: 20-35% is excellent. Healthcare: 15-25% is strong. Manufacturing: 10-20% is healthy. Retail: 5-10% is typical. Real Estate: 30-50% is common. Generally, margins above 10% are considered acceptable, while 15%+ indicates strong operational efficiency.
Net income is the 'bottom line' profit after ALL expenses. EBITDA adds back interest, taxes, depreciation, and amortization to net income. This makes EBITDA useful for: comparing companies with different capital structures, evaluating operational performance independent of financing decisions, and business valuations. However, EBITDA doesn't account for capital expenditures needed to maintain operations.
📈 Disclaimer: This calculator provides estimates for educational purposes only. EBITDA is a non-GAAP metric and has limitations. Industry benchmarks are approximations and may vary. Consult with a financial professional for business valuations and investment decisions.