EBITDA Calculator
Calculate EBITDA from revenue and expense inputs.
Understand earnings before interest, taxes, depreciation, and amortization for business valuation.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is one of the most widely used measures of business profitability.
Why EBITDA matters: EBITDA strips away three things that can distort operational performance:
- Interest — reflects how a business is financed, not how it operates
- Taxes — vary by jurisdiction and tax planning, not operations
- Depreciation and Amortization — accounting choices, not cash flow
What remains is a clean view of how much cash a business generates from its core operations.
Two ways to calculate EBITDA:
Bottom-up (starting from net income):
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Top-down (starting from revenue):
EBITDA = Revenue − Cost of Goods Sold − Operating Expenses (excl. D&A)
This calculator uses the top-down method.
EBITDA Margin:
EBITDA Margin = (EBITDA ÷ Revenue) × 100
Margin benchmarks vary widely by industry:
- Software / SaaS: 25–40% — high margins, low physical costs
- Manufacturing: 10–15% — equipment-heavy, moderate margins
- Retail: 5–10% — high volume, thin margins
EBITDA in M&A:
When businesses are bought and sold, valuation is often expressed as an EBITDA multiple:
Enterprise Value = EBITDA × Multiple
For profitable private businesses, multiples typically range from 8× to 12×.
A business with $500,000 EBITDA might sell for $4M–$6M.
Important caveat: EBITDA is not a substitute for cash flow. It excludes capital expenditures, working capital changes, and debt repayment. Use it alongside other metrics for a complete picture.