EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's overall financial performance and is used as an alternative to net income in some circumstances.

Why is EBITDA important?

EBITDA strips away the effects of financing and accounting decisions, allowing for a clearer comparison of profitability between companies in the same industry.

Is EBITDA the same as Cash Flow?

No. EBITDA ignores changes in working capital and capital expenditures (CapEx). It can be misleading if a company has heavy debt payments or needs to spend a lot on equipment.

What is a good EBITDA margin?

It varies by industry, but generally, an EBITDA margin of 10% or higher is considered good. Software companies often have margins of 40%+, while retail might be lower.

Home / Finance / EBITDA Calculator

EBITDA Calculator

Calculate your company's operating performance instantly.

Calculate EBITDA

Net Income ($)

Interest Expense ($)

Taxes ($)

Depreciation ($)

Amortization ($)

EBITDA

$140,000

Understanding EBITDA

EBITDA is one of the most widely used metrics in finance. It helps investors compare companies without the "noise" of tax rates, debt structures, and accounting methods.

💡 Expert Insight from David Chen, CFA

"Use EBITDA to compare competitors, but never use it to measure cash flow. I've seen many businesses with positive EBITDA go bankrupt because they couldn't pay their loan principal or buy new inventory. EBITDA is a starting point, not the finish line."

⚠️ Common Mistake: Confusing EBITDA with Cash Flow

EBITDA does NOT equal cash. A company can have high EBITDA but still run out of cash if it has big debt payments, capital expenditures, or needs to buy inventory. Always look at Free Cash Flow alongside EBITDA.

The Formula

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Why Critics Hate It

Warren Buffett famously dislikes EBITDA because it ignores Capital Expenditures (CapEx). If you run a trucking company, your trucks wear out. Depreciation is a real cost. Ignoring it makes the business look more profitable than it actually is.

Reviewed by David Chen, CFA

Chartered Financial Analyst | Last Updated: November 2025

🔗 Embed This Calculator

Add this tool to your financial blog or website: