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EBITDA Calculator
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What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a widely used metric to evaluate a company's operating performance by stripping away financing decisions, accounting methods, and tax environments.
Formula
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Why Use EBITDA?
It allows investors to compare the profitability of different companies in the same industry by eliminating the effects of:
- Financing: Interest expenses depend on debt levels.
- Government: Tax rates vary by location.
- Assets: Depreciation depends on capital investments history.
help FAQ
Is EBITDA the same as Gross Profit?
No. Gross profit only subtracts the Cost of Goods Sold (COGS). EBITDA subtracts operating expenses (OPEX) but adds back non-cash expenses like depreciation.
Is a higher EBITDA better?
Generally, yes. A positive and growing EBITDA indicates that the company's core business operations are profitable.