EBITDA calculator: how to calculate EBITDA and EBITDA margin
Enter revenue, net profit, tax, interest, depreciation and amortisation and see your EBIT, EBITDA and EBITDA margin straight away.
Short answer
EBITDA = net profit + tax + interest + depreciation + amortisation: profit before interest, taxes, depreciation and amortisation. With a net profit of 96,000, tax of 24,000, interest of 15,000, depreciation of 40,000 and amortisation of 5,000, EBITDA is 180,000. On revenue of 1.2 million that is an EBITDA margin of 15%.
EBITDA calculator
All figures are in the profit and loss account for the same year. Any currency works.
- EBIT (operating profit)
- 135,000
- EBITDA margin
- 15.0%
- EBITDA
- 180,000
EBITDA and EBIT formulas
| Measure | Formula |
|---|---|
| EBIT (operating profit) | net profit + tax + interest expense |
| EBITDA | EBIT + depreciation + amortisation |
| EBITDA from revenue | revenue − cost of sales − staff costs − other operating costs (excluding depreciation) |
| EBITDA margin | EBITDA ÷ revenue × 100% |
Depreciation covers tangible assets such as vans, machines and buildings; amortisation covers intangible assets such as goodwill and software. If interest income is included in net profit, use net interest expense.
Both routes give the same number. Bottom-up (from net profit) is easiest with a set of annual accounts. Top-down (from revenue) is handier when you calculate per month or per branch.
Worked example
A fictional installation company has this profit and loss account for the year.
| Item | Amount |
|---|---|
| Revenue | 1,200,000 |
| Net profit after tax | 96,000 |
| + Corporation tax | 24,000 |
| + Interest expense | 15,000 |
| = EBIT | 135,000 |
| + Depreciation of vans and tools | 40,000 |
| + Amortisation of software | 5,000 |
| = EBITDA | 180,000 |
| EBITDA margin | 180,000 ÷ 1,200,000 = 15% |
What EBITDA is used for
Comparing businesses. EBITDA strips out differences in financing, tax and depreciation policy. Two installation companies with the same EBITDA perform equally well operationally, even if one leases its vans and the other buys them.
Valuing a business. In small and mid-sized acquisitions, value is often expressed as a multiple of EBITDA. The right multiple depends on the sector, growth, dependence on the owner and the quality of the figures.
Borrowing. Lenders look at debt relative to EBITDA, and a loan agreement may set a maximum.
EBITDA is not cash flow. Capital expenditure, loan repayments, tax and growing working capital all cost money, so a business with a healthy EBITDA can still be short of cash. Check your current ratio too.
Getting EBITDA from your accounts
You need the profit and loss account. In Xero and QuickBooks Online, depreciation and interest usually have their own accounts among the expenses; check which accounts hold them in your chart of accounts, and use the same period for every figure.
Want EBITDA per month or per branch? Connect Xero, QuickBooks Online or Exact Online to DigiData and let the AI agent build a financial dashboard with EBITDA, margin and liquidity. Check gross margin with the margin calculator.
Frequently asked questions
What is the difference between EBIT and EBITDA?
EBIT is profit before interest and tax but after depreciation. EBITDA adds depreciation and amortisation back. For a business with a lot of machinery or vehicles, EBITDA is therefore well above EBIT.
What is a good EBITDA margin?
It varies widely by sector. A wholesaler runs on low margins, a software company on high ones. Compare your EBITDA margin with your own previous years and with businesses of a similar size in the same sector.
Can EBITDA be negative?
Yes. Then operating costs, excluding depreciation, exceed revenue: the business loses money on day-to-day operations before interest and investment are even paid.
Does the owner's salary count?
Yes. A director's salary is an operating cost and lowers EBITDA. In an acquisition, buyers often calculate an adjusted EBITDA that replaces an unusually high or low owner salary with a market-rate one.
EBITDA and margin, every month
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