Calculate EBITDA from your income statement
Start from net profit or operating profit; the calculator adds back finance costs, zakat and income tax, depreciation and amortisation, and shows EBITDA and its margin.
EBITDA measures a business's profit from its operations before finance costs, zakat and income tax, depreciation and amortisation come into it. That is why analysts and lenders use it to compare operating performance across a company's own periods, or against companies with different financing and asset bases.
The EBITDA calculator does that sum for you: enter your income statement figures and it shows EBITDA and EBIT, plus the EBITDA margin and net debt to EBITDA if you enter the figures for them. For the measure itself and how it is used, see EBITDA in the Qoyod glossary.
What is the EBITDA calculator?
A free tool that works out earnings before interest, taxes, depreciation and amortisation from your income statement. It updates instantly with no submit button and takes two starting points: net profit or operating profit. Alongside EBITDA it shows three optional figures: adjusted EBITDA after non-recurring items, the EBITDA margin, and net debt to EBITDA.
How is EBITDA calculated?
To calculate EBITDA, use either of two routes:
- From net profit: net profit + finance costs + zakat and income tax + depreciation + amortisation.
- From operating profit: earnings before interest, tax and zakat (EBIT) + depreciation + amortisation.
Example: a business has net profit of 400,000, finance costs of 60,000 and zakat and income tax of 40,000. EBIT is 400,000 + 60,000 + 40,000 = 500,000. With depreciation of 150,000 and amortisation of 50,000, EBITDA is 500,000 + 150,000 + 50,000 = 700,000.
The two routes agree when the only gap between operating profit and net profit is financing, zakat and tax. If they give different results, the gap is other non-operating items between operating profit and net profit.
Depreciation and amortisation in EBITDA
The D and the A in EBITDA are two different items: depreciation spreads the cost of tangible fixed assets such as equipment, buildings and vehicles over their useful lives, and amortisation does the same for intangible assets such as software and trademarks. Neither takes cash out in the period, which is why both are added back to profit when calculating EBITDA.
Zakat, income tax and finance costs
Zakat and income tax are added back together, as in the EBIT line of Qoyod's income statement. If your lender uses a different definition, follow theirs. VAT is never added back, because it is not a tax on profit. For Jordan entities, add back income tax only.
Finance costs are added back as they appear under that line in the income statement, whatever the financing form. If finance income is included in net profit, subtract it; that is a method choice, offered in an optional field.
Adjusted EBITDA
Adjusted EBITDA strips out non-recurring items, such as a gain on selling an asset or a one-off restructuring cost. Enter one-off expenses as positive and one-off gains as negative, and the calculator shows the result as adjusted EBITDA next to EBITDA.
IFRS does not require EBITDA to be presented in the financial statements, and its definition varies between users; the result is a guide.
EBITDA margin and net debt to EBITDA
- EBITDA margin: EBITDA ÷ revenue × 100. In the example above, with revenue of 3,500,000, the margin is 20%. More under EBITDA margin.
- Net debt to EBITDA: (borrowings − cash and equivalents) ÷ EBITDA for the last 12 months. If cash exceeds debt the calculator shows "Net cash", and if EBITDA is zero or negative it shows "Not meaningful". More under debt-to-EBITDA ratio.
There is no single right level for every business; compare your result with your own past periods or with the published accounts of similar companies.
What the calculator leaves out
- Cash flow: EBITDA does not subtract changes in working capital or capital expenditure, so it is not the cash the business generates.
- Net profit: for profit as a share of sales use the profit margin calculator, and for the sales level that covers your costs use the break-even calculator.
- Your lender's definition: some lenders define the EBITDA items in their agreements; if theirs differs from the calculator's method, follow theirs.
Where the figures come from
Profit, finance costs, zakat and tax, depreciation and amortisation come from the income statement; borrowings and cash come from the balance sheet. In Qoyod, the second starting point is the net income before interest, tax and zakat (EBIT) line of the income statement; both statements are available on the Basic plan. If you want a sheet that keeps the calculation for several periods, download the EBITDA calculation template.
Why use the Qoyod EBITDA calculator
- Two routes: from net profit or from operating profit.
- Saudi treatment of zakat: zakat and income tax are added back together, as in Qoyod's income statement.
- Adjusted EBITDA: an optional field for non-recurring items.
- Margin and leverage: EBITDA margin and net debt to EBITDA on the same screen, with no ready-made verdict on the result.
Got questions?
Straight answers to what accountants and business owners ask about calculating EBITDA.
What is the difference between EBITDA and operating profit?
Operating profit (EBIT) is profit before interest, tax and zakat; EBITDA adds depreciation and amortisation back to it. So EBITDA exceeds operating profit by those two items.
Is zakat added back when calculating EBITDA?
Yes, zakat and income tax are added back together, as in the EBIT line of Qoyod's income statement. If your lender uses a different definition, follow theirs. VAT is never added back.
What is the difference between depreciation and amortisation?
Depreciation spreads the cost of tangible fixed assets, such as equipment and buildings, over their useful lives; amortisation does the same for intangible assets, such as software and trademarks. Both are added back when calculating EBITDA.
What is adjusted EBITDA?
EBITDA after stripping out non-recurring items, such as a gain on selling an asset or a one-off restructuring cost. Its definition varies between users, and IFRS does not require EBITDA to be presented.
How do I calculate the EBITDA margin?
Divide EBITDA by revenue and multiply by 100. With EBITDA of 700,000 and revenue of 3,500,000, the margin is 20%. Enter revenue in the calculator and the margin appears automatically.
What is a good net debt to EBITDA ratio?
There is no single right level for every business. Compare your result with your own past periods or with the published accounts of similar companies, and calculate it on EBITDA for the last 12 months.