EBITDA Calculator

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is calculated as: EBITDA = Revenue − COGS − Operating Expenses + Depreciation & Amortization. It is widely used in company valuations because it strips out capital structure effects (interest), tax jurisdictions (taxes), and accounting depreciation policies (D&A), allowing apples-to-apples comparison of operating performance between companies with different financing or asset bases.

EBIT (Earnings Before Interest and Taxes), also called Operating Income, is calculated as Revenue minus COGS minus Operating Expenses. EBITDA adds back Depreciation and Amortization to EBIT: EBITDA = EBIT + D&A. The difference represents the non-cash charges that reduce EBIT but do not consume actual cash. For capital-intensive businesses with large D&A, EBITDA can be significantly higher than EBIT.

Enterprise Value (EV) represents the total value of a company's business operations — what an acquirer would pay for the entire enterprise including debt. The EV/EBITDA multiple is applied as: EV = EBITDA × EV Multiple. Typical EV/EBITDA multiples range from 6–10× for mature industries, 10–20× for high-growth sectors, and can exceed 20× for software companies. The appropriate multiple depends on the industry, growth rate, and market conditions.

EBITDA margins vary significantly by industry. Software and technology companies often achieve 20–40% EBITDA margins. Healthcare services typically see 15–25%. Manufacturing businesses range from 10–20%. Retail and food service often have thin margins of 5–15%. Capital-intensive industries like utilities and telecom may show 30–50% EBITDA margins because of large D&A add-backs. Comparing EBITDA margins is most meaningful within the same industry.

Gross Profit = Revenue − COGS. It measures how much profit remains after accounting for the direct costs of producing goods or services. EBIT = Gross Profit − Operating Expenses. It further deducts selling, general and administrative expenses (SG&A), research and development, and other operating costs. Gross Margin measures production efficiency; EBIT Margin measures overall operational efficiency including overhead.

Net Income is calculated as EBIT minus Interest Expense minus Taxes: Net Income = EBIT − Interest − Taxes. This is a simplified income statement model. In practice, companies may have other income items, minority interests, discontinued operations, and extraordinary items. However, for quick financial analysis and model building, this formula captures the core income statement relationship between revenue, costs, and bottom-line profit.

Yes. For small businesses in stable industries, EV/EBITDA multiples of 3–6× are common. For startups with negative EBITDA, the EV/EBITDA method does not apply — investors typically use revenue multiples (EV/Revenue) instead. This calculator is most useful for businesses that have reached positive EBITDA. Enter your trailing twelve months (TTM) or projected annual figures to estimate enterprise value.

Enterprise Value = Equity Value (Market Cap) + Total Debt − Cash. Enterprise Value represents the value of the entire business. Equity Value represents only the value belonging to shareholders. When using EV/EBITDA to estimate equity value, you would subtract net debt from the EV: Equity Value = EV − Net Debt. This calculator computes EV only — to get equity value, subtract your total debt and add back cash on the balance sheet.