The calculation
EBITDA margin formula
EBITDA stands for earnings before interest, taxes, depreciation and amortization. Divide EBITDA by revenue and multiply by 100 to express it as a margin.
EBITDANet income + Interest + Taxes + Depreciation + Amortization
EBITDA marginEBITDA ÷ Revenue × 100
Definition reference: U.S. Securities and Exchange Commission guidance on EBIT and EBITDA.
Use reported figures carefully
Where to find the inputs
Revenue and net income normally come from the income statement. Interest and income tax may appear there or in the notes. Depreciation and amortization can appear in the cash-flow statement, footnotes or operating-expense disclosures.
- Keep the period consistent. Do not combine annual revenue with quarterly expenses.
- Preserve signs. Enter net losses, net interest income or tax benefits as negative amounts.
- Avoid double counting. If depreciation is already combined with amortization in one reported figure, enter the total once and leave the other field at zero.
Worked example
From $80,000 net income to $140,000 EBITDA
A business reports $500,000 of revenue, $80,000 of net income, $12,000 of interest expense, $18,000 of income tax expense, $25,000 of depreciation and $5,000 of amortization. The add-backs total $60,000, producing EBITDA of $140,000 and an EBITDA margin of 28%.
Important limitation
EBITDA is not the same as cash flow
EBITDA excludes interest, taxes and non-cash depreciation and amortization, but it does not capture every cash requirement. It omits changes in working capital, capital expenditures, debt principal payments and other cash movements.
The SEC treats EBITDA as a non-GAAP financial measure. Company presentations may also show “adjusted EBITDA” with additional, company-specific exclusions. This calculator intentionally stops at the standard EBITDA components.
Interpret in context
How to compare EBITDA margins
A higher margin means more EBITDA relative to revenue, but there is no universal “good” percentage. Capital intensity, business model, accounting choices and industry economics differ. Compare the same definition across similar companies and periods, and read the reconciliation to the most comparable GAAP measure.