Irish Calculators
Business

EBITDA and EBIT from Net Income Calculator

Add the relevant financing, tax and non-cash charges back to net income. Enter tax benefits or net interest income with the correct sign and avoid adding costs that were never deducted.

Runs privately in your browserMethod reviewed

Your numbers

Your figures stay on this device.

How the calculation works

Reconcile net income to EBIT and EBITDA using the expense amounts already included in the accounts. This is an arithmetic bridge between earnings measures, not a cash-flow forecast or an automatically adjusted earnings valuation.

EBIT = net income + net interest expense + income tax expense. EBITDA = EBIT + depreciation + amortisation.

  1. Check the starting profit

    Use a defined reporting period and reconcile the inputs to the same accounts. Each add-back should correspond to an amount that affected the starting net income.

  2. Build EBIT

    Add interest and the income-tax charge to net income. This removes those financing and tax effects under the supplied classification, while retaining depreciation and amortisation.

  3. Build EBITDA

    Add depreciation and amortisation to EBIT. These add-backs remove the included charges but do not reverse asset purchases or calculate replacement expenditure.

Worked example: Earnings bridge

Sample inputs demonstrate the method. They are not a forecast or product offer.

Net income of €100,000 plus €10,000 interest and €20,000 tax gives EBIT of €130,000. Adding €15,000 depreciation and €5,000 amortisation gives the example EBITDA of €150,000.

Net income
100000
Net interest expense
10000
Income tax expense or benefit
20000
Depreciation
15000
Amortisation
5000

Expected result

EBIT
€130,000.00
EBITDA
€150,000.00
Worked example: Loss with tax benefit

Sample inputs demonstrate the method. They are not a forecast or product offer.

Net income
-50000
Net interest expense
5000
Income tax expense or benefit
-10000
Depreciation
8000
Amortisation
2000

Expected result

EBIT
-€55,000.00
EBITDA
-€45,000.00

Understanding your result

The difference between EBIT and EBITDA is the supplied depreciation and amortisation. Neither result automatically includes exceptional-item adjustments or a company's own definition of adjusted EBITDA.

EBITDA can differ substantially from operating cash flow because working-capital movements, capital spending and cash timing are absent. It is not an amount automatically available to repay borrowing or distribute.

Questions you might have

Can EBITDA be positive while cash flow is negative?

Yes. EBITDA excludes capital spending and working-capital movements, so it should not be used as a substitute for a cash-flow statement.

Choosing the right inputs

Net income
Start with net income after the interest, tax, depreciation and amortisation you intend to add back. Preserve a loss as a negative number.
Net interest expense
Enter the net interest expense already deducted. A net interest-income amount can be negative; do not turn it into an expense merely to increase the result.
Income tax expense or benefit
Enter the tax charge included in net income, preserving a tax benefit as negative. The calculator does not compute the tax charge itself.

Common mistakes to avoid

  • Do not add back an expense that the net-income input already excludes.
  • Do not replace capital expenditure with depreciation; they measure different effects in the accounts.

Assumptions to check

  • Use amounts in one currency and one reporting period. Results are labelled EUR; the arithmetic also works for another consistent currency.
  • Enter a tax benefit or net interest income as negative. Charges must already be included in the net income being reconciled.

Sources and method

Read our calculation and testing approach.