EBITDA Calculator
Calculate your company's operating performance instantly.
Calculate EBITDA
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.
💡 Key Insight, 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.
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