EBITDA calculator

How to calculate EBITDA

There are two routes, and they should give the same answer:

EBITDA = net profit + interest + tax + depreciation + amortisation

EBITDA = operating profit + depreciation + amortisation

Then EBITDA margin = EBITDA ÷ revenue × 100.

In plain words, you start from profit and add back the costs EBITDA leaves out. Depreciation spreads the cost of physical assets such as machinery and vehicles over the years they're used; amortisation does the same for intangible ones such as purchased goodwill, software or licences. Neither is a payment made in the year, which is part of why EBITDA is popular, and part of why it can mislead.

Where to find each figure

• Revenue, operating profit, interest, tax and net profit are lines on your profit and loss account.
• Interest should be the net figure: interest paid minus any interest received.
• Tax is the tax charge in the accounts for that year, which can differ from the tax actually paid during it.
• Depreciation and amortisation can be spread across several lines, such as cost of sales and administrative expenses. Take the totals from the notes on fixed and intangible assets, or from the cash flow statement, where they're added back.

Worked example

A fictional 85-person food manufacturer making chilled desserts for retailers had these results for its last financial year:

From net profit: £312,000 + £58,000 + £104,000 + £186,000 + £20,000 = £680,000. From operating profit: £474,000 + £186,000 + £20,000 = £680,000. Both routes agree, and the EBITDA margin is 10.6% against an operating margin of 7.4%. These are the defaults in the two calculators.

What EBITDA doesn't tell you

EBITDA is useful for following trading performance over time, but it leaves out real costs. Read it with these in mind:

• Equipment wears out. Depreciation is the accounting trace of money already spent on assets that will need replacing. Set EBITDA against your capital spending: a company that must spend £200,000 a year on equipment just to stand still has far less to spare than its EBITDA suggests.
• It isn't cash. Customers paying later, stock building up, loan repayments and tax all take cash that EBITDA ignores. A cash flow forecast shows them.
• Debt still has to be serviced. Lenders look at EBITDA to see how comfortably interest and repayments are covered, not because the interest doesn't matter.

To judge your own figure, compare the EBITDA margin with your previous years and your budget. When it moves, find the cost line that moved it before drawing conclusions.

Common mistakes

• Adding back interest received. Only the net interest cost belongs in the add-back.
• Using tax paid instead of the tax charge, so the figure moves with payment dates rather than with the year's profit.
• Missing depreciation that sits in cost of sales. Take the total from the notes, not from one expense line.
• Adjusting too freely. An "adjusted EBITDA" that strips out every unwelcome cost as a one-off has stopped measuring trading. Keep adjustments few, named and the same every year.
• Comparing years across the 2026 lease change (UK). For accounting periods beginning on or after 1 January 2026, FRS 102 puts most leases on the balance sheet. Rent on them is replaced by depreciation and interest, which EBITDA adds back, so EBITDA can rise with no change in how the business trades. Leases of under 12 months and of low-value items can stay off the balance sheet. Check which basis each year used before comparing them.