EBITDA Calculator

This EBITDA calculator gives you a fast, clear view of your business's core earnings power. Enter your operating profit alongside your depreciation and amortization expenses, and you'll instantly see your EBITDA — the number that investors, lenders, and potential acquirers use most often when evaluating a business.

Whether you're preparing for a business sale, benchmarking your performance against industry peers, or tracking how your company is trending quarter over quarter, EBITDA gives you a standardized snapshot that cuts through accounting complexity. It strips out interest costs, tax obligations, and non-cash expenses so you can see what your business actually generates from its day-to-day operations.

The formula is straightforward: EBITDA = Operating Profit + Depreciation + Amortization. This calculator handles the arithmetic instantly as you type — all you need are three numbers from your income statement. No spreadsheets, no manual calculation, no risk of arithmetic error.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures how much profit a business generates purely from its core operations, before accounting for financing costs, tax obligations, or non-cash accounting charges.

Think of it this way: EBITDA tells you what your business would earn if it owned all its assets outright, paid no taxes, and hadn't written off the cost of any equipment or intangible assets. That sounds hypothetical — because it is — but this standardized baseline is exactly what makes EBITDA so useful for comparison purposes. It puts companies with very different capital structures, tax situations, and asset bases on an equal footing.

Here's who uses it and why:

• Investors use EBITDA to compare businesses across industries without the noise of different financing decisions
• Lenders use it to assess how much debt a business can comfortably service
• Business owners use it to track operational health, independent of how the business is financed
• M&A advisors use it as the starting point for business valuation

It's worth knowing that EBITDA is a non-GAAP (non-Generally Accepted Accounting Principles) metric — meaning it won't appear as a labelled line on a standard income statement, and the SEC requires public companies to reconcile it with net income. That said, its widespread adoption in private markets, investment banking, and lending makes it an essential number for any business owner to understand.

This calculator uses the operating profit approach, the most direct method when you already have your EBIT (Earnings Before Interest and Taxes) available:

EBITDA = Operating Profit + Depreciation + Amortization

Where:

• Operating Profit = Revenue minus all operating expenses including COGS, salaries, and overhead — but before interest and taxes (also called EBIT or Operating Income on your income statement)
• Depreciation = The annual non-cash write-down of tangible fixed assets like machinery, vehicles, computers, and buildings
• Amortization = The annual non-cash write-down of intangible assets like patents, customer lists, software licenses, or acquired goodwill

There's also an alternative formula that starts from net income:

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Both approaches produce identical results. Use whichever matches the financial data you have on hand. If your income statement shows operating profit directly, this calculator's approach is the fastest path to your answer.

Worked example:

• Operating Profit: $120,000
• Depreciation: $18,000
• Amortization: $7,000
• EBITDA = $145,000

Once you have your EBITDA figure, two questions matter most: Is this healthy in absolute terms? And how does it compare to my revenue?

EBITDA Margin is the figure that allows meaningful comparison — it expresses EBITDA as a percentage of total revenue:

EBITDA Margin = (EBITDA / Revenue) x 100

This percentage lets you benchmark against your industry, regardless of company size.

General EBITDA Margin Benchmarks:

Industry-Specific Benchmarks:

These are general reference ranges — actual benchmarks vary by sub-industry, company size, and market conditions. Use them as a starting point, then research sector-specific data for a more precise comparison.

You'll need three numbers from your income statement. Once you have them, the calculation takes about 30 seconds.

1. Enter your Operating Profit. This is your revenue minus all operating expenses, including cost of goods sold and overhead — but before interest and taxes. Look for "Operating Income" or "EBIT" on your income statement. If you don't see it labeled, subtract your total operating costs from gross revenue.
2. Enter your Amortization Expense. This is the annual write-down of intangible assets — patents, customer lists, acquired software, franchise rights, or goodwill. Find it on your income statement or in your depreciation and amortization schedule. If your business has no intangible assets, enter 0.
3. Enter your Depreciation Expense. This is the annual write-down of tangible fixed assets: machinery, vehicles, computers, and buildings. It usually appears as its own line on the income statement or can be found on your cash flow statement under operating activities.
4. Read your EBITDA instantly. The result updates in real time as you type. No submit button needed.

Tip: If you're calculating EBITDA for a specific period — monthly or quarterly — make sure all three inputs cover the exact same time frame. Mixing annual depreciation with monthly operating profit will give you a misleading result.

Example 1: Small Manufacturing Business

A furniture manufacturer reports for the year:

• Operating Profit: $85,000
• Depreciation (machinery, equipment): $22,000
• Amortization: $3,000
• EBITDA: $110,000

With annual revenue of $600,000, the EBITDA margin is about 18.3% — solid for a manufacturing business and well above the industry average floor.

Example 2: Professional Services Firm

A mid-size consulting firm:

• Operating Profit: $210,000
• Depreciation (office equipment, computers): $8,500
• Amortization (client list acquired in a merger): $15,000
• EBITDA: $233,500

With $900,000 in revenue, that's a 26% EBITDA margin — healthy, and likely attractive to any potential acquirer.

Example 3: Restaurant Group

A restaurant group with three locations:

• Operating Profit: $48,000
• Depreciation (kitchen equipment, fit-outs): $31,000
• Amortization (franchise rights): $9,000
• EBITDA: $88,000

On $1.1 million in revenue, that's an 8% margin — right in the normal range for food service, where margins are notoriously tight.

Example 4: SaaS Startup

A growing software company:

• Operating Profit: $180,000
• Depreciation (servers, hardware): $12,000
• Amortization (capitalized software development costs): $28,000
• EBITDA: $220,000

On $800,000 ARR, that's a 27.5% margin — strong for an early-stage SaaS business, and the kind of number that gets investor attention.

One of the most common applications of EBITDA is business valuation. When businesses are bought or sold, the price is typically expressed as a multiple of EBITDA — this is called the EV/EBITDA multiple or simply the "EBITDA multiple."

The formula works like this:

Estimated Business Value = EBITDA x Industry Multiple

Typical EBITDA Multiples by Sector:

So if your EBITDA is $500,000 and you're in professional services, your business might be valued in the $2 million to $3.5 million range. The actual number depends on growth trajectory, customer concentration, recurring revenue, and current deal activity in your sector.

The good news is that understanding your EBITDA gives you a meaningful starting point for those conversations — and often reveals whether there's room to improve it before pursuing a sale.

Important: Always work with a qualified business broker or M&A advisor before relying on EBITDA multiples for actual transaction purposes. Multiples shift with market conditions, and most deals use "adjusted EBITDA" that normalizes for owner compensation and one-time expenses.

Understanding how EBITDA sits alongside other profitability metrics helps you use each one in the right context:

EBITDA vs. Operating Profit: Operating profit includes D&A charges; EBITDA adds them back. EBITDA is always equal to or greater than operating profit.

EBITDA vs. Net Income: Net income reflects all costs — interest, taxes, D&A, and everything else. A business carrying significant debt may show healthy EBITDA but a much lower (or even negative) net income. EBITDA shows the operational picture; net income shows the full picture.

EBITDA vs. Cash Flow: EBITDA is widely called a "cash flow proxy," but it's not the same as operating cash flow. It doesn't capture working capital changes (receivables, inventory, payables) or capital expenditures. A business can post strong EBITDA while still burning cash if it's growing fast or investing heavily in equipment.

EBITDA is a powerful metric, but it comes with real limitations worth understanding — especially before using it to make major decisions.

It ignores capital expenditure requirements. A capital-intensive business — manufacturing, transportation, construction — may show impressive EBITDA while spending heavily just to maintain existing equipment. The more useful metric in these cases is "EBITDA minus CapEx," which gives a more honest view of free cash generation.

It can be presented selectively. Because EBITDA isn't a GAAP metric, there's significant flexibility in how it's calculated and reported. "Adjusted EBITDA" can add back stock compensation, restructuring costs, and other items that inflate the number considerably. Always ask what's been excluded when someone shows you an adjusted figure.

It doesn't reflect working capital changes. Fast-growing businesses often need more cash tied up in receivables and inventory. This strain won't show up in EBITDA.

It's not on the income statement. EBITDA must be manually calculated, and different people may calculate it differently based on what they include in "operating expenses."

None of this means EBITDA isn't useful — it absolutely is. It just means the smartest approach is to use it as one data point alongside net income, operating cash flow, and sector-specific metrics, rather than as the single measure of business health.

Formula used by this calculator:

EBITDA = Operating Profit + Amortization Expense + Depreciation Expense

This reflects the standard operating income (EBIT) approach to EBITDA calculation, consistent with widely accepted financial analysis and investment banking practice.

Notes on use:

• All three inputs should cover the same reporting period (monthly, quarterly, or annual) for accurate results
• If your business has no amortization expenses, enter 0 in that field
• This calculator is designed for quick calculations and informational purposes. For business valuations, loan applications, M&A transactions, or investor reporting, please work with a qualified financial professional