# EBITDA Calculator

Maximize your financial analysis with our easy-to-use EBITDA Calculator. Quickly calculate your company's earnings before interest, taxes, depreciation, and amortization to assess operational performance and make informed business decisions.

\$0.00

## How to Calculate EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure used to evaluate a company's operating performance without the impact of financial and accounting decisions. Here’s how to calculate EBITDA:

Formula for EBITDA
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Steps to Calculate EBITDA:

1. Start with Net Income: This is the company's total earnings, also known as net profit. It's the bottom line of the income statement after all expenses, including taxes, interest, depreciation, and amortization have been deducted from total revenue.
2. Add back Interest: Since EBITDA is a measure of operational performance independent of financial structure, add back any interest expenses the company incurred.
3. Add back Taxes: Add the amount of taxes paid back to net income. This step removes the impact of tax strategies and rates, focusing purely on operational earnings.
4. Add back Depreciation and Amortization: These are non-cash expenses related to the gradual charging to expense of fixed assets (depreciation) and intangible assets (amortization). Adding these back provides a clearer picture of the company's operational cash flows.

Example Calculation:

Assume a company has the following financials:

Net Income: \$100,000
Interest Expense: \$20,000
Taxes Paid: \$30,000
Depreciation: \$10,000
Amortization: \$5,000

Using the EBITDA formula:
EBITDA = \$100,000 + \$20,000 + \$30,000 + \$10,000 + \$5,000 = \$165,000

This means the EBITDA for this period is \$165,000. By calculating EBITDA, you can get a sense of the company's profitability from its core operations before the influence of financial structure, tax rates, and non-cash accounting figures.

Bench Accounting offers comprehensive bookkeeping services tailored to your business needs. Sign up today for a free month of bookkeeping and experience the peace of mind that comes from knowing your finances are in expert hands. Let Bench take the burden of bookkeeping off your plate for good, so you can focus on growing your business with confidence.