EBIT vs EBITDA

EBIT is earnings before interest and taxes. EBITDA also adds back depreciation and amortization, so it is never lower than EBIT and leaves out the cost of using long-lived assets.

Compare: EBIT and EBITDA

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Net income

Profit after all expenses, interest and taxes for the period. Enter a loss as a negative number.

Interest expense

Interest charged on the business's borrowings during the period.

Income tax expense

Income tax charged for the period. A tax credit is entered as a negative number.

Depreciation

The period's expense for the wear and use of tangible assets such as equipment and buildings.

Amortization

The period's expense for using up intangible assets such as software or patents. Enter 0 if there is none.

Currency

EBIT

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EBITDA

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The two formulas

EBIT = Net income + Interest expense + Income tax expense

EBITDA = Net income + Interest expense + Income tax expense + Depreciation + Amortization

One example, both measures

Illustrative example, not actual company results

Net income: $50,000
Interest expense: $10,000
Income tax expense: $15,000
Depreciation: $20,000
Amortization: $5,000

EBIT: $75,000

How the parts add up

EBIT is $75,000.

EBITDA: $100,000

How the parts add up

EBITDA is $100,000.

How each one is built

Starting from net income, EBIT adds back interest expense and income tax. EBITDA goes one step further and also adds back depreciation and amortization, the expenses that spread the cost of equipment, buildings and intangible assets over the years they are used. The calculator above builds both from the same figures, so the only difference between the results is depreciation plus amortization.

An example

A business reports net income of $50,000, interest expense of $10,000 and income tax of $15,000. Its EBIT is 50,000 + 10,000 + 15,000 = $75,000. With depreciation of $20,000 and amortization of $5,000, its EBITDA is 75,000 + 20,000 + 5,000 = $100,000.

Why the difference matters

EBIT still carries the cost of using long-lived assets, so it suits comparisons where those assets are a real cost of doing business. The interest coverage ratio uses EBIT for this reason.
EBITDA leaves that cost out, which makes businesses with different asset bases and depreciation policies easier to compare. It is the earnings figure behind the EBITDA margin and EV/EBITDA.
Neither is cash flow. Both ignore spending on new equipment and changes in working capital, and EBITDA also ignores the interest and tax the business must still pay.
EBITDA is not defined by accounting standards. Companies that report it often make their own adjustments, so check how any figure you compare was built.

EBIT built up from net income can also differ from the operating income a company reports, when it has non-operating income or expenses such as investment gains. The EBITDA calculator lets you start from either figure.

Summary

	EBIT	EBITDA
Built from net income	+ interest + income tax	+ interest + income tax + depreciation + amortization
Includes the cost of long-lived assets	Yes	No
Defined by accounting standards	No; often close to operating income	No; a non-GAAP measure
Used in	Interest coverage	EBITDA margin, EV/EBITDA, many lender tests

Sources

Variables used in Data Set, NYU Stern School of Business (Aswath Damodaran's faculty data site). Accessed 18 October 2026.
Conditions for Use of Non-GAAP Financial Measures, U.S. Securities and Exchange Commission (Federal Register, via GovInfo / U.S. Government Publishing Office). Accessed 18 October 2026.
5.1 The Income Statement - Principles of Finance | OpenStax, OpenStax (Rice University). Accessed 18 October 2026.
Non-GAAP Financial Measures, U.S. Securities and Exchange Commission, Division of Corporation Finance. Accessed 18 October 2026.

This page is for education. It is not financial, investment, tax, accounting or legal advice. Results depend on the figures you enter and the formula definitions shown, so check them against your own statements and, where it matters, ask a qualified professional.