# EBITDA Calculator - Earnings Before Interest, Tax, Depreciation, and Amortization

Written by:
PK

Below is an EBITDA calculator, or Earnings Before Interest, Tax, Depreciation, and Amortization Calculator. Enter a company's net income, interest expenses in the period, tax expenses, depreciation expenses, and amortization expenses to compute its EBITDA.

## What is EBITDA?

EBITDA, or Earnings Before Interest, Tax, Depreciation, and Amortization, is an alternative measure of earnings that extends EBIT to add back amortization and depreciation charges. As depreciation and amortization are non-cash writedowns of, respectively, tangible and intangible assets, EBITDA removes them to get closer to cash flows.

As with EBITA, EBITDA is a better approximation of a company's current cash flows available than net income. However, as you add-back more adjustments to net income, your measure becomes more and more of a fiction – and manipulable. However, EBITDA is extremely popular as an alternative earnings metric and cash flow proxy, and it's also used like EV/EBIT in its own enterprise value ratio EV/EBITDA. Additionally, interest and tax expenses are "real" outflows so many analyses should really start first on the cash flow statement.

Additionally, EBITDA is very popular as an adjusted earning metric when evaluating purchasing whole companies – either buying out public companies or buying private companies on multiples. New management can optimize their capital structure and organization to move the lever on tax costs and interest charges, and they can also adjust the pace of purchases of intangible and tangible assets.

### EBITDA Formula

The formula for EBITDA is:

EBITDA=net\ income+interest\ expense+\\\ tax\ expense+depreciation+amortization

Where:

• Net Income: Net income from the income statement
• Interest Expense: Amount the company paid in the period to service its debt
• Tax Expense: Amount paid in taxes in the period
• Amortization: Amount the company took in amortization charges in the period
• Depreciation: Amount the company took in depreciation charges in the period

### PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK lives in New Hampshire with his wife, kids, and dog.

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