How to Calculate EBITDA
EBITDA — earnings before interest, taxes, depreciation, and amortization — strips financing and accounting decisions out of a company’s results so you’re left with a read on how much cash-generating power the core operations actually have. It’s also the number buyers and lenders anchor valuation multiples to, which makes it worth calculating even for a business with no plans to sell.
Calculate it
Worked examples
Worked Example 1 — Logistics Company
A logistics company reports $180,000 in net income, after paying $25,000 in loan interest and $45,000 in taxes, and after $30,000 in depreciation on its vehicle fleet plus $5,000 in amortization of software licenses. EBITDA = $180,000 + $25,000 + $45,000 + $30,000 + $5,000 = $285,000.
Worked Example 2 — Restaurant Chain
A restaurant chain reports $60,000 in net income, $10,000 in interest, $18,000 in taxes, and $22,000 in depreciation on kitchen equipment and leasehold improvements, with no amortization. EBITDA = $60,000 + $10,000 + $18,000 + $22,000 = $110,000.
The logistics company’s $285,000 EBITDA is the figure a buyer would typically apply a valuation multiple to rather than net income alone — at a common 5× EBITDA multiple, that works out to roughly $1.4 million, well above what net income by itself would suggest the business is worth. Finmap breaks down the operating metrics that feed into EBITDA — revenue, costs, and the non-cash add-backs — so you can track the trend without rebuilding the calculation from scratch each quarter.
Track this metric automatically
Finmap calculates it from your connected accounts and shows the trend over time — no spreadsheets to rebuild each month.
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