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EBITDA Calculator
Calculate EBITDA and margin using top-down or bottom-up methods.
Two Calculation Methods
Top-down from revenue or bottom-up from net income
EBITDA Margin
Automatic margin percentage calculation
Valuation Ready
Compare companies across sectors with EV/EBITDA
Calculate EBITDA
Choose a method and enter your financial figures.
How to Calculate EBITDA
Top-Down (from Revenue)
Operating Profit = Revenue - OpEx
EBITDA = Operating Profit + D + A
Start with total revenue, subtract operating expenses (COGS, SG&A, R&D), then add back depreciation and amortization. This method is intuitive when you have a full income statement.
Bottom-Up (from Net Income)
EBITDA = Net Income + I + T + D + A
Start with net income and add back interest, taxes, depreciation, and amortization. Useful when you have the bottom line but not full operating detail. Both methods should give the same result with consistent data.
Why EBITDA Matters for Valuation
For Business Owners
EBITDA shows how well your operations generate profit independent of financing and accounting decisions. A rising EBITDA margin means you are becoming more operationally efficient. In M&A, buyers typically value businesses as a multiple of EBITDA.
For Investors
EV/EBITDA lets you compare companies across different capital structures, tax jurisdictions, and depreciation policies. Typical multiples: mature businesses 6-8x, growth companies 12-20x+. Lower multiples may indicate value; higher multiples signal growth expectations.
How to Use This EBITDA Calculator
Choose Method
Top-down from revenue or bottom-up from net income.
Enter Figures
Revenue, expenses, depreciation, and amortization.
View Results
EBITDA, margin percentage, and full breakdown.
EBITDA Limitations and Alternatives
- Ignores capital expenditure. EBITDA adds back depreciation but doesn't account for the actual capex needed to maintain operations. Capital-intensive businesses can look more profitable than they really are.
- Working capital excluded. Changes in receivables, inventory, and payables affect cash flow but not EBITDA. A growing company may show strong EBITDA while burning cash on working capital.
- EBIT as alternative. EBIT (operating profit) includes depreciation, giving a more conservative view. Useful when comparing companies with different asset ages or depreciation policies.
- Free cash flow. FCF = EBITDA - capex - working capital changes - taxes. It shows actual cash available. Many investors prefer FCF over EBITDA for valuation as it reflects economic reality.
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