EBITDA Calculator
EBITDA and EBITDA margin from either direction, from net income up or from revenue down, plus adjusted EBITDA with every add-back itemised.
Work it out
Opens on a worked example. Change any line and every figure follows. Cost of goods sold and operating expenses go in before depreciation and amortisation.
Add-backs, one per line
Runs entirely in your browser. Nothing you enter is sent to us or stored.
EBITDA
4,200,000.00
- EBITDA margin
- 7.2%
Adjusted EBITDA: 6,100,000.00
| Add-back | Amount | Running total |
|---|---|---|
| EBITDA | 4,200,000.00 | |
| Restructuring, closing the Toledo branch | 450,000.00 | 4,650,000.00 |
| Litigation settlement | 300,000.00 | 4,950,000.00 |
| Owner compensation above market | 600,000.00 | 5,550,000.00 |
| ERP migration, "one-off" for the third year running | 350,000.00 | 5,900,000.00 |
| Warehouse relocation | 200,000.00 | 6,100,000.00 |
Itemised, because adjusted EBITDA presented as one number is a claim, and as a list it is an argument someone can check.
How it is worked out
| Ratio | Formula |
|---|---|
| EBITDA | Revenue - COGS - Operating expenses (both before D&A) |
| EBITDA margin | EBITDA / Revenue |
Cost of goods sold and operating expenses are entered before depreciation and amortisation, which are their own lines.
Related reading
Where the figures behind a ratio come from, and what it takes to trust them.
- Glossary
General Ledger
The general ledger is the master record of an entity's accounts, holding every posted debit and credit by account and period. Subledgers feed it, the chart of accounts defines its structure, and the trial balance is its summary.
- Glossary
Balance Sheet Reconciliation
Balance sheet reconciliation is the practice of reconciling every balance sheet account, not just cash, on a documented schedule with a named owner and risk tier per account. It is the close deliverable auditors test first, and account reconciliation is the technique it applies, account by account.
- Glossary
Variance Analysis
Variance analysis compares an actual result against a benchmark, usually budget, forecast, or prior period, and explains the difference with specific, evidenced causes. It is distinct from flux analysis, which reviews period-over-period fluctuations during the close.
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The formula
EBITDA = Net income + Interest + Tax + Depreciation + Amortisation
or = Operating income + Depreciation + Amortisation
EBITDA margin = EBITDA / Revenue
Adjusted EBITDA = EBITDA + each add-back, listed
What the number means
EBITDA exists to compare the operating performance of businesses with different capital structures, tax positions and asset bases. That is a genuine job and it is why lenders and acquirers use it.
What it is not is cash flow, and the gap is the thing to understand. EBITDA ignores working capital movement entirely, so a company growing fast can have rising EBITDA and falling cash because every new customer ties up receivables and inventory. It also adds back depreciation, which is the accounting for assets that will in fact need replacing, so for a capital-intensive business EBITDA systematically flatters.
Adjusted EBITDA is where the judgement is, and it is not a defined term. Add-backs are proposed by whoever benefits from them. Legitimate: a genuine one-off such as a restructuring, a litigation settlement, or a transaction cost. Contested: owner compensation above market, which is normal in a sale process and is a real adjustment, and also the easiest place to add a number nobody can test. Not legitimate: anything recurring that has been relabelled one-off for three consecutive years.
The tool itemises every add-back and prints them, because an adjusted EBITDA presented as a single number is a claim, and presented as a list it is an argument someone can check.
A worked example
A distribution business at $4.2 million EBITDA and $6.1 million adjusted, where the $1.9 million of add-backs are itemised and two of the five would not survive a buyer's diligence.
Ratios are downstream
of the close.
Connected accounts, reconciled at zero tolerance, with statements for any period and any entity. Your team approves what the agents propose, and the numbers the ratios come from are ones you can sign.