Corporate Finance

EBITDA Calculator

Calculate Earnings Before Interest, Taxes, Depreciation, and Amortization. The gold standard metric for analyzing core operational profitability.

Income Statement Inputs (Annual)

Required to calculate EBITDA Margin.

The "bottom line" profit after all expenses.

Wear and tear on physical assets.

Expensing of intangible assets (patents, software).

Operational Profit

EBITDA

₹26,00,000

EBITDA Margin26.00%

Calculated by adding back non-operational and non-cash expenses to Net Income.

Why EBITDA Matters

  • The Core Business: EBITDA strips away the effects of financing decisions (Interest), government rates (Taxes), and accounting rules (Depreciation/Amortization). It shows how much cash the core business operations are actually generating.
  • Valuation Multiples: When a company is bought or sold, it is rarely valued on Net Income. Buyers use an "EBITDA Multiple" (e.g., 5x EBITDA or 10x EBITDA) to determine the enterprise value.
  • The Flaw of EBITDA: Warren Buffett famously hates EBITDA. As he says, "Does management think the tooth fairy pays for capital expenditures?" Depreciation is a real expense—machines break and must be replaced. Ignoring depreciation can make a capital-intensive business look far more profitable than it really is.