EBITDA Calculator
EBITDA with the gap to net income shown item by item. It is a useful comparison measure and a poor proxy for cash, and the add-backs on this page are why.
Also called: ebitda margin calculator, operating cash proxy.
$3,000,000.00, a margin of 30%. Net income is $1,450,000.00, and the $1,550,000.00 of difference is the interest, tax, depreciation and amortisation added back.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
How this is calculated
EBITDA strips out financing, tax and non-cash charges so two businesses with different capital structures and asset bases can be compared. That is genuinely useful. It is also why it flatters: depreciation is not a real cash cost this year, but it is a real cost of assets that will need replacing, and a business that ignores it will eventually meet the bill. Showing net income alongside keeps both facts in view.
EBITDA = revenue - operating expenses before depreciation and amortisation- R
- Revenue (currency)
- OpEx
- Cash operating expenses (currency)
Method and limits
What it assumes
- Operating expenses entered exclude depreciation and amortisation.
What it deliberately does not model
- Working capital movements and capital expenditure are excluded, so EBITDA is not free cash flow.
- Adjusted EBITDA, where further items are added back at management discretion, is a different and softer number.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Why is EBITDA criticised?
- Because it removes real costs. Interest is owed, tax is owed, and depreciation reflects assets wearing out. It is a comparison tool, not a measure of what the business generated.