EBITDA Calculator
Calculate EBITDA, adjusted EBITDA, EBIT, and EBITDA margin from revenue, COGS, operating expenses before depreciation and amortisation, depreciation, amortisation, and adjustment inputs. Use this with operating margin, net profit, and ROI when profitability, valuation, and investment return need separate views.
EBITDA details
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This calculator is for general business information only and is not financial, tax, accounting, or legal advice.
Results
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Adjusted EBITDA
£135,000.00
Revenue of £500,000.00 less COGS and cash operating expenses gives EBITDA of £130,000.00. After add-backs and normalisations, adjusted EBITDA is £135,000.00.
Visual breakdown
What EBITDA shows
EBITDA means earnings before interest, tax, depreciation, and amortisation. It starts from operating performance but adds back non-cash depreciation and amortisation so you can focus on earnings before financing, tax, and accounting allocation effects.
In this calculator, EBITDA is revenue minus COGS and cash operating expenses before depreciation and amortisation. EBIT is then shown separately after depreciation and amortisation are deducted.
Adjusted EBITDA goes one step further by adding back one-off costs and subtracting normalisation items. Keep those adjustments documented because they can materially change the story.
Worked example: GBP 500,000 revenue
With GBP 500,000 revenue, GBP 190,000 COGS, and GBP 180,000 cash operating expenses, EBITDA is GBP 130,000. If depreciation is GBP 25,000 and amortisation is GBP 15,000, EBIT is GBP 90,000.
Add GBP 10,000 of one-off add-backs and subtract GBP 5,000 of normalisation deductions, and adjusted EBITDA becomes GBP 135,000. On GBP 500,000 revenue, adjusted EBITDA margin is 27%.
This is why EBITDA can look stronger than EBIT or net profit. It intentionally removes some costs, so compare it with operating margin and net profit before drawing conclusions.
EBITDA vs EBIT vs net profit
EBITDA excludes depreciation and amortisation. EBIT includes them. Net profit then includes interest, tax, and other below-the-line items.
Asset-light businesses may have EBITDA and EBIT close together. Capital-heavy businesses can show strong EBITDA while depreciation makes EBIT much lower.
Use EBITDA to compare operating cash-earnings style performance, but use EBIT and net profit when asset replacement, financing, tax, and final profit matter.
Use adjusted EBITDA carefully
Add-backs should be genuinely unusual, non-recurring, or outside normal operations. If an expense happens every year, calling it one-off can make profitability look better than it is.
Normalisation deductions are just as important. If owner salary is below market, rent is temporarily discounted, or customer support is under-resourced, a realistic adjustment may reduce EBITDA.
This calculator does not prepare accounts or decide accounting treatment. Use it for planning and conversation, then reconcile against proper financial statements.
Reading EBITDA with context
EBITDA removes interest, tax, depreciation, and amortisation from the profit view. That makes it useful for comparing operating earnings before financing structure and non-cash asset charges.
It is not the same as cash flow. Working capital movements, capital expenditure, debt service, tax payments, and collection timing are all outside this calculator.
Adjusted EBITDA can be useful when unusual events distort a period, but every adjustment needs a clear explanation.
EBITDA formulas used here
Gross profit = revenue - COGS. EBITDA = gross profit - operating expenses before depreciation and amortisation.
EBIT = EBITDA - depreciation - amortisation. EBITDA margin = EBITDA / revenue x 100.
Adjusted EBITDA = EBITDA + one-off add-backs - normalisation deductions. Treat adjustments conservatively if you want a result that survives scrutiny.
Common mistakes to avoid
Using EBITDA as if it were cash available to owners.
Adding back recurring expenses simply because they are inconvenient.
Comparing EBITDA margins across businesses with very different capital intensity or accounting policies.
Calculate EBITDA and adjusted EBITDA
- 1
Enter revenue and COGS
Use the same period for revenue and direct cost of goods sold.
- 2
Add cash operating expenses
Enter operating expenses before depreciation and amortisation, such as payroll, rent, marketing, software, and admin.
- 3
Enter D&A
Add depreciation and amortisation separately so the calculator can show both EBITDA and EBIT.
- 4
Adjust carefully
Use add-backs and normalisation deductions only when you can explain why they should be excluded from normal performance.
EBITDA: common questions
How do you calculate EBITDA?
This calculator uses revenue minus COGS minus operating expenses before depreciation and amortisation. It then shows EBIT after depreciation and amortisation, plus adjusted EBITDA after add-backs and normalisation deductions.
Is EBITDA the same as cash flow?
No. EBITDA ignores working capital, capital expenditure, debt payments, tax payments, and timing of receipts and bills. It can be useful, but it is not a cash-flow statement.
What counts as an EBITDA add-back?
Common examples include unusual legal costs, one-off restructuring costs, or non-recurring transaction costs. Routine salaries, software, rent, marketing, and ongoing admin normally should not be treated as add-backs.
Why compare EBITDA with operating margin?
Operating margin includes depreciation and amortisation through EBIT. Comparing both helps you see whether the business is profitable before and after non-cash asset costs.
Is EBITDA an accounting statement?
No. It is a planning calculation from the values you enter. Reconcile important reporting, lender, investor, or tax decisions against proper accounts and professional advice.
Can EBITDA be negative?
Yes. If COGS and cash operating expenses exceed revenue, EBITDA will be negative before depreciation, amortisation, interest, and tax are considered.
Why does adjusted EBITDA differ from EBITDA?
Adjusted EBITDA includes add-backs and normalisation deductions. Those changes can be reasonable, but they should be documented and not used to hide recurring costs.
Disclaimer: This calculator is for general business planning and education. It does not provide tax, legal, accounting, or investment advice. Check important decisions against real financial records and qualified professionals where appropriate.