EBITDA Calculator
EBITDA Calculator
Operating expenses should exclude depreciation, amortization, interest, and income tax.
Valuation (optional)
Based on your results — what to do next:
What is the business worth?
Your $450,000 of EBITDA at 5x implies roughly $2,250,000 in enterprise value. Run a full valuation with multiple methods.
Could you finance a purchase?
A buyer of this business would use $450,000 of EBITDA to service acquisition debt. See what an SBA loan payment looks like.
How do margins compare?
Your EBITDA margin is 18.8%. Break it into gross, operating, and net margin to see where profit leaks.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This calculator finds it two ways, by subtracting costs from revenue or by adding interest, taxes, depreciation and amortization back to net income, then shows your EBITDA margin, interest coverage, and the enterprise value implied by a chosen EV/EBITDA multiple.
How EBITDA Is Calculated
① From revenue
EBITDA = Revenue − COGS − Operating Expenses
Operating expenses exclude depreciation, amortization, interest, and income tax.
② From net income
EBITDA = Net Income + Taxes + Interest + Depreciation + Amortization
Both methods give the same number when the inputs come from the same income statement.
③ Valuation
Enterprise Value = Adjusted EBITDA × Multiple; Equity Value = EV − Debt + Cash
Adjusted EBITDA adds back one-time or owner-specific costs such as above-market owner pay.
| Variable | Meaning | Typical Value |
|---|---|---|
| Revenue | Total sales for the period | Top line of the income statement |
| COGS | Direct cost of goods or services sold | Varies widely by industry |
| D&A | Depreciation and amortization | Non-cash; found on the cash-flow statement |
| Multiple | EV / EBITDA valuation multiple | Often 3–6x small private firms, higher for larger or faster-growing ones |
| Interest coverage | EBITDA ÷ Interest expense | Lenders often want 3x or more |
Worked Example — $2.4M revenue, $1.2M COGS, $750K operating expenses
- EBITDA = $2,400,000 − $1,200,000 − $750,000 = $450,000 (18.8% margin)
- EBIT = $450,000 − $90,000 depreciation = $360,000
- Interest $45,000 → pre-tax income $315,000; tax at 25% → net income $236,250
- Check: $236,250 + $78,750 tax + $45,000 interest + $90,000 D&A = $450,000
- At a 5x multiple: enterprise value $2,250,000; less $500,000 debt plus $150,000 cash = $1,900,000 equity value
💡 Pro-Tip
Normalize before you multiply. Buyers and lenders value adjusted EBITDA, not the raw figure. Add back owner perks, one-time legal costs, and above-market owner salary, but be ready to document every add-back, because each one is a negotiating point. Remember EBITDA ignores capital spending and working-capital needs, so two businesses with the same EBITDA can have very different cash flow.
EBITDA Calculator FAQ
What is a good EBITDA margin?
It depends on the industry. Software and professional services often run 20–40%, while retail, restaurants, and construction commonly sit in the 5–15% range. Compare against peers rather than a single benchmark.
Is EBITDA the same as cash flow?
No. EBITDA ignores taxes, interest, capital expenditures, and changes in working capital, so it can overstate the cash a business actually generates. Free cash flow is a better measure of cash available to owners.
How do you calculate EBITDA from net income?
Add income taxes, interest expense, depreciation, and amortization back to net income. For example, $236,250 of net income plus $78,750 tax, $45,000 interest, and $90,000 D&A equals $450,000 of EBITDA.
What EBITDA multiple should I use to value a business?
Small private businesses commonly sell for roughly 3–6 times adjusted EBITDA, with higher multiples for growth, recurring revenue, and low owner dependence. Use the Business Valuation Calculator to cross-check with other methods.