The EBITDA calculator is a financial tool that helps you to determine the earnings before interest, taxes, amortization, and depreciation. This term is similar to the EBIT that enables you to measure the company’s financial strength and the revenue it can generate.

## What Is EBITDA?

In Finance and Accounting, EBITDA is described as:

**"The earnings before interest, taxes, depreciation, and amortization”**

As we know EBITDA is similar to EBIT which helps you determine how well companies are actually performing.

## EBITDA Calculation Formula:

EBITDA gives an insight into a company's cash flow and profitability without considering non-operating factors. Before revealing the formula follow the points that are helpful for EBITDA calculations.

**Find Net Income:**Net income is the total revenue minus all expenses including taxes and interest. Get net income by the total income statement of a company.**Add Up Values:**From the company financial statement find the interest expenses, taxes, depreciation, and amortization and add up all these terms.

The calculator utilizes the following formula for EBITDA calculations:

**EBITDA = operating profit + depreciation expense + amortization expense**

Read: __how to figure EBITDA__. For detailed learning about EBITDA, read this one.

## What Is EBITDA Multiple?

When you look for information regarding the process of EBITDA, you might encounter EBITDA multiple. To calculate this multiple, we need the value of earnings before interest, taxes, depreciation and amortization, and a company's enterprise value.

With this help, Investors can determine whether a company is undervalued or overvalued before deciding whether or not to invest.

## How To Calculate EBITDA?

EBITDA includes all income and expenses while excluding income tax and interest expenses. Let’s explore it with the help of an example!

### Example:

An enterprise has a net profit of $5,500, the expense on interest is $3,500, taxes of $4,500, depreciation expense of $2,000, and amortization expense of $2,500. How to find EBITDA?

#### Solution:

We can calculate EBITDA by using net income. For calculating EBITDA, we have:

**EBITDA = Net profit + Interest + Taxes + Depreciation + Amortization**

**EBITDA = $5,500 + $3,500 + $4,500 + $2,000 + $2,500 **

**= $18,000**

## How To Use This Calculator?

The calculator will help you to carry out calculations with definite ease! To use the tool, follow the instructions below:

### Required Entities:

- Revenue
- Expense
- Amortization
- Depreciation

### Results Summary:

- EBITDA value
- EBITDA margin

## FAQs:

### How Does EBITDA Compare to Gross Profit?

EBITDA measures the profitability of a company or business and compares one with another in the same zone. Gross profit is a company's profit after subtracting the cost of selling or manufacturing products.

### Where Is The EBITDA Valid For?

EBITDA is extremely useful for the following.

- Business evaluation
- Determining profitability
- Comparison of the company to the other in the same sector

### What Is The EBITDA Margins Formula?

EBITDA margin is the measurement that ascertains what a percentage is of your total revenue. Higher margins designate that you have a lot of revenue remaining after operating expenses. it is calculated as follows:

**EBIT Margin: EBITDA / Total Revenue **

## References:

**Wikipedia:** Earning before interest, taxes, depreciation, amortization, Usage and criticism, Margin, Variations.