EBITDA Calculator

How it is calculated

The tool works upward from net income, the bottom line of the income statement. EBIT = net income + interest + taxes, EBITDA = EBIT + depreciation + amortization, and EBITDA margin = EBITDA ÷ revenue × 100. Net income may be negative for a loss-making period. Interest, taxes, depreciation and amortization must be zero or positive, entered as the amounts expensed in the period, so a tax credit cannot be typed as a negative number. Revenue must be above zero, and there is no result when the computed EBITDA is larger than revenue, since that would need negative costs. All amounts should cover the same period, such as one fiscal year, in one currency. Only the items you enter are added back; one-off items, stock compensation and interest income are not adjusted, so "adjusted EBITDA" figures will differ.

Common mistakes

• Starting from operating income or EBIT instead of net income. The tool adds interest and taxes itself, so an EBIT figure typed into the net income field counts them twice.
• Entering a tax or interest rate instead of the amount. The fields take the currency amounts from the income statement, not percentages.
• Using revenue from a different period than the profit figures. A quarterly net income against annual revenue makes the margin look far too low, and an annual profit against quarterly revenue can push EBITDA above revenue, which gives no result.
• Entering a net loss as a positive number. A loss needs a minus sign, otherwise net income and EBITDA come out too high.
• Treating EBITDA as cash flow. It ignores capital spending, working capital and debt repayments, so a company can show strong EBITDA and still run short of cash.