EBITDA Calculator – Formula, Margin & Worked Example

EBITDA Calculator – Formula, Margin & Worked Example

Calculate EBITDA from net income and add-backs, then learn the EBITDA margin formula with a clear worked example.

UNDERSTAND THE ANSWER

How is this calculated?

EBITDA adds interest, taxes, depreciation and amortization back to net income. The calculator combines interest and taxes in one input and depreciation and amortization in another. To find EBITDA margin, divide the calculated EBITDA by revenue and multiply by 100.

EBITDA and EBITDA margin formulasEBITDA = net income + interest + taxes + depreciation + amortization; EBITDA margin = EBITDA ÷ revenue × 100%

A practical example

Worked example: net income of $50,000 plus $20,000 of interest and taxes and $15,000 of depreciation and amortization produces EBITDA of $85,000. If revenue is $500,000, EBITDA margin is 17%.

Tax and location note

This accounting estimate is not tied to a country or reporting standard. Amounts use your selected currency. Company filings may classify add-backs differently, and EBITDA is not cash flow or a substitute for audited statements or professional accounting advice.

Assumptions, interpretation and common mistakes

Calculation assumptions

  • Net income and all add-backs cover the same accounting period.
  • Interest and taxes are entered together, and depreciation and amortization are entered together.
  • One-time adjustments, stock compensation and other non-GAAP add-backs are excluded unless already reflected in the inputs.

How to interpret the result

  • EBITDA approximates operating earnings before financing, tax and non-cash D&A effects.
  • EBITDA margin expresses EBITDA as a percentage of revenue and is most useful when comparing similar businesses.
  • Review cash flow, debt, capital spending and net income alongside EBITDA.

Common mistakes to avoid

  • Do not treat EBITDA as cash available to owners or lenders.
  • Do not add back an expense twice if net income was already adjusted.
  • Do not compare margins across companies without checking accounting periods and classifications.