OneTaskBy Tim King · Updated
EBITDA Calculator
Adjusted EBITDA Margin, EBIT and How to Add Back Interest and Depreciation
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How the EBITDA Calculator works
This EBITDA calculator starts from net profit and adds back the tax, interest, depreciation and amortisation shown in your accounts. It gives EBIT, EBITDA and, if you add one-off costs, adjusted EBITDA, each with its margin on revenue. Every figure is one you enter from your own profit and loss statement.
EBITDA calculator formula
EBIT = net profit + tax expense + interest expense EBITDA = EBIT + depreciation + amortisation Adjusted EBITDA = EBITDA + one-off costs Margin = figure ÷ revenue × 100
The tax figure is the expense already recorded in your accounts, not a rate. One-off costs are things like a legal settlement, a restructure or owner costs that a buyer would not carry.
Worked example: a profitable business
Revenue is 2,000,000 and net profit 150,000. Adding back 60,000 of tax and 40,000 of interest gives EBIT of 250,000, a 12.5% margin. Adding 80,000 of depreciation and 20,000 of amortisation gives EBITDA of 350,000, or 17.5%. With 25,000 of one-off costs, adjusted EBITDA is 375,000, or 18.8%.
Worked example: a loss before interest
Revenue is 500,000 and the business made a net loss of 20,000, with no tax, 15,000 of interest and 30,000 of depreciation. EBIT is −5,000, a margin of −1.0%, but EBITDA is 25,000, or 5.0%, because the equipment write-down is not a cash cost this year.
EBITDA reference table
Business value at three common EBITDA multiples. Real multiples vary by industry, size and growth.
| EBITDA | At 3× | At 5× | At 8× |
|---|---|---|---|
| 100,000 | 300,000 | 500,000 | 800,000 |
| 200,000 | 600,000 | 1,000,000 | 1,600,000 |
| 300,000 | 900,000 | 1,500,000 | 2,400,000 |
| 400,000 | 1,200,000 | 2,000,000 | 3,200,000 |
| 500,000 | 1,500,000 | 2,500,000 | 4,000,000 |
| 600,000 | 1,800,000 | 3,000,000 | 4,800,000 |
| 700,000 | 2,100,000 | 3,500,000 | 5,600,000 |
| 800,000 | 2,400,000 | 4,000,000 | 6,400,000 |
| 900,000 | 2,700,000 | 4,500,000 | 7,200,000 |
| 1,000,000 | 3,000,000 | 5,000,000 | 8,000,000 |
| 1,100,000 | 3,300,000 | 5,500,000 | 8,800,000 |
| 1,200,000 | 3,600,000 | 6,000,000 | 9,600,000 |
| 1,300,000 | 3,900,000 | 6,500,000 | 10,400,000 |
| 1,400,000 | 4,200,000 | 7,000,000 | 11,200,000 |
| 1,500,000 | 4,500,000 | 7,500,000 | 12,000,000 |
| 1,600,000 | 4,800,000 | 8,000,000 | 12,800,000 |
| 1,700,000 | 5,100,000 | 8,500,000 | 13,600,000 |
| 1,800,000 | 5,400,000 | 9,000,000 | 14,400,000 |
| 1,900,000 | 5,700,000 | 9,500,000 | 15,200,000 |
| 2,000,000 | 6,000,000 | 10,000,000 | 16,000,000 |
Quick answers
- EBITDA is profit before interest, tax, depreciation and amortisation.
- EBITDA margin is EBITDA divided by revenue.
- Small private businesses often sell for 3 to 5 times EBITDA.
- Positive EBITDA does not mean positive cash flow.
- Adjusted EBITDA adds back costs that will not recur.
- Divide a sale price by EBITDA to see how many times earnings a buyer paid: 1,500,000 on 300,000 is 5 times.
FAQ
Why do buyers and lenders use EBITDA?
It strips out how the business is financed, how its assets are written down and its tax position, so two businesses can be compared on their operating earnings alone.
What is a good EBITDA margin?
It varies widely by industry. Software businesses can run above 30%, while retail and construction often sit between 5% and 10%. Compare against businesses in the same sector.
What are the limits of EBITDA?
It ignores the cash spent replacing equipment, the interest owed on debt and changes in working capital. A business can show healthy EBITDA and still run short of cash.
See also: all Profit & Growth tools, Rates & Pricing, Invoicing & Payments.
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