Free calculator

EBITDA Formula and Calculator

EBITDA stands for earnings before interest, taxes, depreciation and amortization. It shows what your day-to-day business earns. Use the calculator, or watch Claude or ChatGPT work it out from a set of books.

Work it out here

Example figures from a sample month. Type over them with your own.

EBITDA

$52,600

Margin

11.8%

EBITDA is $52,600, or 11.8% of revenue. That's net profit with $7,600 added back.

Get your real EBITDA from your books

Connect QuickBooks, Xero or NetSuite, then ask Claude or ChatGPT.

Ask your own books

The formula: Net profit + Interest + Taxes + Depreciation + Amortization

Starting from operating profit? Enter it as net profit, and leave interest and taxes blank.

Or ask Claude or ChatGPT

Kipper
Question:

What was our EBITDA last month?

Answer:
  • Asking Kipper for last month's profit and loss…
  • Finding interest, tax, depreciation and amortization…
  • Adding them back to net profit…

$52,600, an 11.8% margin. That's your net profit of $45,000, with $7,600 added back.

EBITDA · August
Amount
Net profit$45,000
Interest+$1,400
Income tax+$2,300
Depreciation and amortization+$3,900
EBITDA$52,600
Question:

Which lines did you add back?

Answer:
  • Kipper is returning the account lines on the P&L…
  • Matching them to your accounts…
  • Adding them up…

These four, straight off your profit and loss. Depreciation is the biggest.

Added back · August
LineAmount
Loan interest$1,400
Income tax$2,300
Depreciation$3,100
Amortization$800
Question:

How has EBITDA moved over the last three months?

Answer:
  • Kipper is returning the monthly profit and loss…
  • Adding back each month…
  • Working out the margin…

EBITDA grew every month. The margin dipped in August because two subcontractor bills came early.

EBITDA · last three months
MonthEBITDAMargin
Jun$41,50010.5%
Jul$50,60012.3%
Aug$52,60011.8%
Question:

What's our operating profit?

Answer:
  • Kipper is returning last month's profit and loss…
  • Taking depreciation and amortization off EBITDA…
  • Checking it against the P&L…

$48,700. That's EBITDA less depreciation and amortization. It's also called EBIT.

Operating profit · August
Amount
EBITDA$52,600
Depreciation and amortization-$3,900
Operating profit (EBIT)$48,700
Reply to Claude…
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The formula

How to calculate EBITDA

Three steps, all from your profit and loss.

01

Start with net profit

Take the bottom line of your profit and loss for the month or year.

02

Add back interest and taxes

They depend on how you borrow and where you pay tax, not on how the business runs. Now you have EBIT.

03

Add back depreciation and amortization

They spread the cost of things you bought before. No cash goes out for them this month.

From net profit

Net profit + Interest + Taxes + Depreciation + Amortization

The sample month: $45,000 + $1,400 + $2,300 + $3,100 + $800 = $52,600.

From operating profit

Operating profit + Depreciation + Amortization

The same month: $48,700 + $3,100 + $800 = $52,600. Both ways give the same answer.

EBITDA margin

EBITDA ÷ Revenue × 100

$52,600 ÷ $446,000 = 11.8% of revenue.

In your books

Find each figure on your profit and loss

Everything you need is on one report. Net profit is at the bottom, and the lines to add back sit above it.

  • Depreciation and amortization sit with your operating costs.
  • Interest and income tax usually come after operating profit.
  • Add all four back to net profit. Here, that's $45,000 + $7,600 = $52,600.
Profit and loss · August Sample business
Revenue $446,000
Cost of sales $268,000
Gross profit $178,000
Payroll $86,000
Rent and facilities $25,500
Software and tools $12,400
Other expenses $1,500
Depreciation Add back $3,100
Amortization Add back $800
Operating profit EBIT $48,700
Interest Add back $1,400
Income tax Add back $2,300
Net profit $45,000
EBITDA 11.8% margin $52,600

Related terms

EBITDA and the terms people mix it up with

Each one is a different cut of profit. Here's what it means and how to work it out.

EBITDA

Profit before interest, taxes, depreciation and amortization.

Net profit + interest + taxes + D&A

EBITDA margin

EBITDA as a share of revenue.

EBITDA ÷ revenue × 100

EBIT

Profit before interest and taxes. Often the same as operating profit.

Net profit + interest + taxes

Operating profit

Gross profit less operating costs, including depreciation.

Gross profit − operating costs

Adjusted EBITDA

EBITDA with one-off costs or gains taken out.

EBITDA ± one-off items

Net profit

What's left after every cost.

Revenue − all costs

Side by side

A calculator vs asking your books

A calculator works out the figures you type. Here's what changes when Claude or ChatGPT can read your books instead.

Finding the figures

Typing the numbers

Pick four figures off your P&L by hand.

Connected to your books

Read straight off your profit and loss.

What gets added back

Typing the numbers

Easy to miss a loan or an asset line.

Connected to your books

Each line is listed, so you can check it.

Comparing months

Typing the numbers

Work out each month separately.

Connected to your books

Ask how EBITDA has moved since last month.

Next month

Typing the numbers

Find the figures and type them in again.

Connected to your books

Ask the same question. The figures are current.

Trusting the answer

Typing the numbers

It's only as good as what you typed.

Connected to your books

Every figure traces back to your books.

Connect your books and skip the typing

Start a free trial, connect QuickBooks, Xero or NetSuite, and ask for your real EBITDA.

Ask your own books See pricing

Both assistants

Use Claude or ChatGPT: Kipper works with both

Your team can use Claude or ChatGPT to work out EBITDA and ask follow-up questions. Either way, the figures come straight from your books. Click a card to see it in the demo.

Kipper
Question:

What was our EBITDA last month?

Answer:
  • Asking Kipper for last month's profit and loss…
  • Finding interest, tax, depreciation and amortization…
  • Adding them back to net profit…

$52,600, an 11.8% margin. That's your net profit of $45,000, with $7,600 added back.

EBITDA · August
Amount
Net profit$45,000
Interest+$1,400
Income tax+$2,300
Depreciation and amortization+$3,900
EBITDA$52,600
Question:

Which lines did you add back?

Answer:
  • Kipper is returning the account lines on the P&L…
  • Matching them to your accounts…
  • Adding them up…

These four, straight off your profit and loss. Depreciation is the biggest.

Added back · August
LineAmount
Loan interest$1,400
Income tax$2,300
Depreciation$3,100
Amortization$800
Question:

How has EBITDA moved over the last three months?

Answer:
  • Kipper is returning the monthly profit and loss…
  • Adding back each month…
  • Working out the margin…

EBITDA grew every month. The margin dipped in August because two subcontractor bills came early.

EBITDA · last three months
MonthEBITDAMargin
Jun$41,50010.5%
Jul$50,60012.3%
Aug$52,60011.8%
Question:

What's our operating profit?

Answer:
  • Kipper is returning last month's profit and loss…
  • Taking depreciation and amortization off EBITDA…
  • Checking it against the P&L…

$48,700. That's EBITDA less depreciation and amortization. It's also called EBIT.

Operating profit · August
Amount
EBITDA$52,600
Depreciation and amortization-$3,900
Operating profit (EBIT)$48,700
Reply to Claude…
Open the live demo

Connect once, then ask from either one

Read-only access to QuickBooks, Xero or NetSuite, with the same permissions behind each.

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FAQ

EBITDA questions

What people ask about EBITDA, and how to work it out.

It stands for earnings before interest, taxes, depreciation and amortization. It's your profit with those four costs added back. It shows what the day-to-day business earns.
EBITDA = net profit + interest + taxes + depreciation + amortization. You can also start from operating profit: EBITDA = operating profit + depreciation + amortization.
Start with net profit at the bottom. Then add back interest, income tax, depreciation and amortization. They're all lines on the same report. In the sample month, $45,000 + $7,600 = $52,600.
It's EBITDA as a share of revenue. EBITDA margin = EBITDA ÷ revenue × 100. $52,600 of EBITDA on $446,000 of revenue is an 11.8% margin.
There's no single number. It depends on your industry and your size. The most useful comparisons are your own past months, and businesses like yours.
EBIT doesn't add back depreciation and amortization. So EBITDA is EBIT plus those two. In the sample month, EBIT is $48,700 and EBITDA is $52,600.
No. Operating profit comes after depreciation and amortization, so it's usually the same as EBIT. EBITDA adds those two back.
Net profit is what's left after every cost. EBITDA adds four of those costs back: interest, taxes, depreciation and amortization.
It's EBITDA with one-off items taken out, like a legal settlement or the cost of moving office. Lenders and buyers use it to see what a normal year looks like.
No. It's a non-GAAP measure, so there's no set rule for what gets added back. When you compare two businesses, check they worked it out the same way.
Interest, tax and equipment spending are real costs, and EBITDA leaves them out. So a business that spends a lot on equipment can look more profitable than it is.
No. It ignores what customers still owe you, bills you haven't paid yet, and what you spend on equipment. For the cash itself, see cash flow forecasting.
It lets them compare businesses that borrow, pay tax and own equipment differently. Business sales are often priced as a multiple of EBITDA.
Yes, once it can see your books. Connected through Kipper, it reads your profit and loss from QuickBooks, Xero or NetSuite, read-only. Then it adds back each line and shows its work.
QuickBooks, Xero and NetSuite. Kipper reads the profit and loss from all three.

Get your real EBITDA from your books

One read-only connection to QuickBooks, Xero or NetSuite. Then ask Claude or ChatGPT for EBITDA, and how it's moved. We'll help you set it up.

Ask your own books Schedule a demo
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