EBITDA Calculator - Calculate Earnings Before Interest, Taxes, Depreciation, and Amortization
Free EBITDA calculator to determine earnings before interest, taxes, depreciation, and amortization. Calculate operating cash flow by excluding non-cash expenses
EBITDA Calculator
Results
What is EBITDA?
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial metric that represents a company's operating cash flow before financing costs, taxes, and non-cash expenses like depreciation and amortization.
This calculator helps with:
- Business valuation - Determine company value using cash flow metrics
- Investment analysis - Evaluate operating cash flow for investment decisions
- Company comparisons - Compare businesses across different depreciation policies
- Cash flow analysis - Assess operating cash generation capabilities
- Performance tracking - Monitor cash flow trends over time
EBITDA Calculation Components
EBITDA calculation includes these key components:
Revenue
Total income from sales, services, and business activities.
Cost of Goods Sold (COGS)
Direct costs associated with producing goods or services sold.
Operating Expenses
Day-to-day business costs including salaries, rent, utilities, and marketing.
Depreciation & Amortization
Non-cash expenses that are added back to show true cash flow.
EBITDA vs Other Profitability Metrics
EBITDA
Operating cash flow before interest, taxes, depreciation, and amortization.
EBIT
Operating profit before interest and taxes. Includes depreciation/amortization.
EBT
Profit before taxes but after interest. Includes all operating expenses.
How to Use This EBITDA Calculator
Enter Total Revenue
Input your total revenue from all business activities (e.g., $2,000,000)
Enter Cost of Goods Sold
Input direct production costs for goods sold (e.g., $800,000)
Enter Operating Expenses
Input day-to-day business operating costs (e.g., $600,000)
Add Depreciation & Amortization
Include non-cash depreciation and amortization expenses
Benefits of Using This Calculator
- •Business Valuation: Determine company value using industry-standard cash flow metrics.
- •Cash Flow Analysis: Evaluate operating cash generation capabilities more accurately.
- •Company Comparisons: Compare businesses with different depreciation policies and capital structures.
- •Investment Decisions: Assess true operating cash flow for better investment analysis.
- •Performance Tracking: Monitor cash flow trends and operational efficiency over time.
Factors That Affect Your EBITDA Results
1. Revenue Growth
Higher sales volume directly increases EBITDA. Focus on sales and marketing strategies.
2. Cost Management
Controlling COGS and operating expenses improves EBITDA margins significantly.
3. Depreciation & Amortization
Higher depreciation/amortization from capital investments increases EBITDA by being added back.
4. Asset Intensity
Capital-intensive businesses typically have higher depreciation, leading to higher EBITDA.
Frequently Asked Questions
Common questions about EBITDA calculations and cash flow analysis
What is EBITDA?
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) represents a company's operating cash flow before financing costs, taxes, and non-cash expenses like depreciation and amortization.
How is EBITDA calculated?
EBITDA is calculated by taking EBIT and adding back depreciation and amortization expenses. The formula is: EBITDA = Revenue - COGS - Operating Expenses + Depreciation + Amortization + Other Income - Other Expenses.
What's the difference between EBITDA and EBIT?
EBITDA adds back depreciation and amortization to EBIT. This provides a clearer picture of operating cash flow by excluding non-cash expenses that can vary significantly between companies.
Why is EBITDA important for business valuation?
EBITDA is widely used in business valuation because it focuses on operating cash flow and excludes financing decisions, tax environments, and non-cash expenses, allowing for better company comparisons.
What are depreciation and amortization?
Depreciation is the allocation of tangible asset costs over time, while amortization is the allocation of intangible asset costs. Both are non-cash expenses that reduce reported profits but not actual cash flow.
When should businesses use EBITDA vs EBIT?
Use EBITDA for cash flow analysis and business valuation, especially when comparing capital-intensive businesses. Use EBIT for operational efficiency analysis and when non-cash expenses are less relevant.
Is EBITDA the same as operating cash flow?
Not exactly. EBITDA is a proxy for operating cash flow but doesn't include changes in working capital or other cash flow adjustments. It's often used as a starting point for cash flow analysis.
How often should I calculate EBITDA?
Most businesses calculate EBITDA monthly for internal management, quarterly for performance analysis, and annually for financial reporting and valuation purposes.