Free tool
EBITDA Calculator
Work out EBITDA from your P&L, compare it with budget without the usual sign mistakes, and see what happens when the months add up to a quarter. It all runs in your browser. Nothing you type leaves this page.
Calculator
Step 1
Calculate EBITDA
Use the figures for one period, such as a month. Enter costs as positive numbers. Commas, a $ sign and (brackets) for negatives all work.
The bottom line of your P&L. Enter a loss as a negative.
Interest on loans, credit lines and finance leases.
Interest the business earned. It is taken off.
The income tax charge on the P&L. A tax benefit is negative.
Wear on equipment, vehicles and buildings.
Write-down of intangibles such as software or goodwill.
Optional: margin and a cross-check
Adds EBITDA margin.
Builds EBITDA a second way, as a check.
EBITDA
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Enter net income to start.
- EBITDA margin
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- From operating income
The two routes differ by . That gap is usually non-operating income or costs below operating income, such as a gain on selling equipment. Decide which side of the line it belongs on and keep the choice the same every month.
Both routes agree.
Step 2
Compare with budget
Two percentages answer two different questions. Attainment asks how much of the budget you reached, and on budget is 100%. Variance asks how far you are from it, and on budget is 0%. Pick one for your dashboard and set its colors to match.
If you budgeted a loss, enter it as a negative.
- Variance
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- Variance %
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- Attainment
- –
Careful: against a loss budget, the usual actual ÷ budget formula gives , which points the wrong way. Use the variance instead.
Attainment only means something against a budgeted profit. Use the variance here.
Step 3
Roll the months up
These six months are an invented example: a seasonal business with a quiet winter. Replace them with your own EBITDA and budget figures, and compare the three ways a spreadsheet or dashboard might turn them into one number.
Enter at least two months with both figures.
- Monthly % added up
- Monthly % averaged
- Total ÷ total (correct)
Across months: EBITDA against a budget of , a variance of .
The average is percentage points , because every month counts the same however big its budget is.
Step 4
Track it every month
A calculator gives you one month. To see the trend, paste this into SimpleKPI and the built-in AI creates the metrics, the calculated KPIs and the dashboard for you.
Create the monthly metrics Net Income, Interest Expense, Interest Income, Income Taxes, Depreciation and Amortization, in US dollars. Then create an EBITDA calculated KPI: Net Income + Interest Expense - Interest Income + Income Taxes + Depreciation + Amortization. Create a monthly EBITDA Budget KPI in US dollars. Then create two calculated KPIs, and set Calculate by to Total on both, so a quarter or a year is worked out from the totals rather than by averaging the months: - EBITDA vs Budget, as a percentage: EBITDA / EBITDA Budget x 100, where 100% means on budget. - EBITDA Variance, as a percentage: (EBITDA - EBITDA Budget) / EBITDA Budget x 100, where 0% means on budget. Finally, build an EBITDA dashboard showing the last six months: EBITDA against budget, the variance, and a trend for each of the metrics that make up EBITDA.
How to calculate EBITDA
EBITDA is earnings before interest, taxes, depreciation and amortization. Start with net income and add back the four things it leaves out:
EBITDA = net income + interest expense − interest income + income taxes + depreciation + amortization
Or build it down from the top: operating income (EBIT) plus depreciation and amortization. If the two routes give different answers, the difference is something below operating income that is neither interest nor tax. A one-off gain on selling a van is the usual culprit.
An example month for a small services business:
| Net income | $38,000 |
|---|---|
| Interest expense | $6,500 |
| Interest income | $500 |
| Income taxes | $9,000 |
| Depreciation | $14,000 |
| Amortization | $2,000 |
| EBITDA | $69,000 |
On revenue of $600,000 that is an EBITDA margin of 11.5%.
What to add back, and what to leave in
Most EBITDA mistakes in small businesses are not arithmetic. They are a line put on the wrong side.
Add back
- Interest expense, including interest on finance leases
- Income taxes the business records
- Depreciation, including amortization of finance-lease assets
- Amortization of intangibles
Take off
- Interest income: it was never an operating earning
- A tax benefit, which shows as a negative tax line
Leave in
- Payroll, sales, property and excise taxes
- Rent on operating leases, which US GAAP still books as a single operating cost
- Owner salaries. Adding those back gives seller's discretionary earnings, a different number
If the business is an S corp, a partnership or an LLC taxed as one, income passes through to the owners and there is usually little or no income tax line to add back. The owners' personal tax bills never belong in EBITDA.
Three budget mistakes the calculator catches
Reading attainment as variance
Actual ÷ budget × 100 is attainment, where 100% is on budget. (Actual − budget) ÷ budget × 100 is variance, where 0% is on budget. Both are useful. The trouble starts when a dashboard labels one as the other, because every color threshold is then set the wrong way.
Dividing by a loss budget
Budget a loss of $20,000, lose only $10,000, and actual ÷ budget gives 50%: it looks like a miss when you beat the plan by half. Lose $30,000 and it gives 150%. Against a loss budget, use the variance, divided by the budget's absolute value.
Averaging months into a quarter
In the example in step 3, two quiet winter months beat small budgets by a wide margin and the four busy months all fall short. Averaged, the six monthly percentages say 112.7%. Total EBITDA of $98,000 against a total budget of $108,000 says 90.7%. The business missed its half-year budget by $10,000, and the average says it beat it. Added up instead of averaged, the same months show 676.3%.
Whatever you track it in, check how a percentage KPI rolls up over a quarter or a year. It should be recalculated from the totals, never added or averaged.
We found each of these while building our own EBITDA dashboard. How to track EBITDA every month walks through the build and what we changed.
To see these numbers tracked month by month, open the EBITDA KPI dashboard example. For the KPIs that usually sit next to EBITDA, see the financial KPI dashboard example.
What is the formula for EBITDA?
EBITDA = net income + interest expense - interest income + income taxes + depreciation + amortization. You can also build it down from the top of the P&L: operating income (EBIT) + depreciation + amortization. The two usually differ by any non-operating items, such as a gain on selling equipment.
Is EBITDA the same as cash flow?
No. EBITDA ignores the cash that goes into equipment, inventory and customers who haven't paid yet, and the cash that goes out in interest and tax. A business can grow EBITDA every month while its bank balance falls. Track cash from operations next to it.
Do I add back taxes if my business is an S corp or LLC?
Only the income taxes the business itself records. S corps, partnerships and most LLCs pass their income through to the owners, so the business often has little or no income tax line and there is little to add back. The owners' personal taxes aren't a business expense and never go into EBITDA.
Which taxes are added back in EBITDA?
Income taxes only. Payroll taxes, sales tax, property tax and excise taxes are costs of running the business and stay in.
How do I calculate EBITDA variance against budget?
Variance in dollars is actual EBITDA minus budgeted EBITDA. Variance as a percentage is that difference divided by the budget, using the budget's absolute value so the sign stays right when the budget is a loss. A positive variance means you beat budget.
Why does my quarterly EBITDA percentage look wrong?
Percentages can't be added or averaged across months. Months with small budgets count as much as big ones in an average, and adding them gives a number like 290%. The correct quarterly figure is total EBITDA for the quarter divided by total budget for the quarter.
What is the difference between EBITDA and SDE?
Seller's discretionary earnings (SDE) starts from EBITDA and adds back one owner's salary and benefits plus discretionary or one-off costs. It is the figure buyers usually use to value a small owner-operated business. EBITDA is used once a business has a management team that would stay after a sale.
Is EBITDA a GAAP measure?
No. EBITDA isn't defined under US GAAP, so you won't find it on a standard income statement. That is why it pays to write down exactly how you calculate it and keep the calculation the same every month.
Is anything I type into the calculator saved or sent anywhere?
No. The calculator runs entirely in your browser. Nothing you enter is stored or sent to SimpleKPI, and it is gone when you close the page.