EBITDA Calculator
Earnings before interest, tax, depreciation and amortisation — plus margin.
How it works
EBITDA strips out the four things that say more about a company's financing and accounting than its operations: interest, tax, depreciation and amortisation. What is left approximates the cash the core business throws off, which is why buyers and lenders quote multiples of it.
Two routes reach the same number. Top-down: revenue minus COGS minus operating expenses. Bottom-up: net income plus interest plus tax plus depreciation plus amortisation. This calculator works top-down and derives net income on the way, so you can check both agree.
Common questions
Is a high EBITDA margin good?
It depends entirely on the industry. Software routinely runs 30-40%. Grocery retail runs 3-5% and is perfectly healthy at that level. Compare against direct competitors, never across sectors.
Why do people distrust EBITDA?
Because depreciation is a real cost pretending not to be. A haulage firm's trucks genuinely wear out. Charlie Munger's objection was that EBITDA means 'earnings before the costs I would rather you ignored'.
What is adjusted EBITDA?
EBITDA with further add-backs for one-off items — restructuring, legal settlements, owner's personal expenses in a small business. It is not a defined standard, so what gets adjusted is negotiable and worth reading closely.