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EBITDA Calculator: From Net Income or Revenue
EBITDA is earnings before interest, taxes, depreciation and amortization. To calculate it from net income, add interest, taxes, depreciation and amortization back: $200,000 + $20,000 + $60,000 + $30,000 + $10,000 = $320,000. To calculate it from the top, subtract cost of goods sold and operating expenses from revenue. The EBITDA calculator below does both, shows the EBITDA margin and adds owner pay and one-time items to reach adjusted EBITDA.
Prepared by Prospyr · Reviewed October 3, 2026 · Free, no sign-up, runs in your browser
Entity-level only. Leave 0 for a pass-through.
EBITDA
$320,000
EBITDA margin
21.3%
A math aid, not financial or tax advice. EBITDA is not a GAAP measure; lenders and buyers may define adjustments differently.
EBITDA formula: two ways to calculate it
Both methods end at the same place. Pick the one that matches the statement you have.
- From net income (bottom up): EBITDA = net income + interest + taxes + depreciation + amortization
- From revenue (top down): EBITDA = revenue − cost of goods sold − operating expenses (operating expenses excluding depreciation and amortization)
- EBITDA margin: EBITDA ÷ revenue × 100
EBITDA is not defined by GAAP or IFRS, so two people can get different numbers from the same practice. Write down what you included. Corporate Finance Institute lists the main limits: it leaves out interest and taxes, and it ignores the equipment you must replace to keep operating.
Worked example: a med spa with $1.5 million in revenue
| Line | Amount |
|---|---|
| Net income | $200,000 |
| + Interest | $20,000 |
| + Taxes | $60,000 |
| + Depreciation | $30,000 |
| + Amortization | $10,000 |
| EBITDA | $320,000 (21.3% of $1.5M revenue) |
Top down works the same way. A different practice with $1,500,000 of revenue, $300,000 of product and supplies and $800,000 of operating costs has EBITDA of $400,000, a 26.7% margin. Try both modes in the calculator with your own figures.
Adjusted EBITDA: owner pay and one-time add-backs
When a practice is sold, the buyer prices it on what it will earn without you. Adjusted EBITDA is reported EBITDA after changes that show those earnings. Tick "Add adjustments" in the calculator to use these:
- Owner pay normalization: owner pay in the books minus the cost of a replacement. Owners who take a low salary and large profit distributions have a negative or small add-back. Owners who pay themselves well above market have a positive one.
- One-time expenses: a legal settlement, a one-off remodel or a failed hire. Add back only costs that will not repeat.
- Personal expenses: a car, travel or family payroll run through the practice. Expect a buyer to ask for proof.
- One-time income: a grant or insurance payout. Subtract it.
Example: reported EBITDA $320,000 + owner pay add-back $70,000 + one-time expenses $15,000 + personal expenses $5,000 − one-time income $10,000 = adjusted EBITDA of $400,000. Each add-back raises the price a buyer may pay, so each one needs a record. With the adjusted number, go to the practice valuation calculator.
Where EBITDA comes from in your own books
Most of the inputs sit in your profit and loss report: revenue by service line, product cost, payroll, rent and marketing. Prospyr's analytics dashboards show revenue by service and provider sales, which feeds the revenue line this calculator starts from. For a view of money coming and going each month, use the cash flow calculator, and see the med spa software page for how reporting fits with the rest of the practice.
Frequently asked questions
What is the EBITDA formula?
EBITDA = net income + interest + taxes + depreciation + amortization. You can also start from operating profit: EBITDA = operating profit + depreciation + amortization. Both give the same number when the inputs come from the same income statement.
How do I calculate EBITDA margin?
Divide EBITDA by revenue and multiply by 100. With $320,000 of EBITDA on $1,500,000 of revenue, the margin is 21.3%. Margin lets you compare a practice with one of a different size, as long as both calculate EBITDA the same way.
What is adjusted EBITDA?
Adjusted EBITDA is EBITDA after add-backs for items that will not continue under a new owner, such as one-time expenses, personal expenses paid by the practice and owner pay above or below what a replacement would cost. Buyers and lenders usually look at adjusted EBITDA, so the adjustments need records behind them.
How do I normalize owner compensation?
Subtract the cost of hiring someone to do the owner's job from what the owner was actually paid, and add the difference. If the owner took $250,000 and a replacement injector or manager would cost $180,000, the add-back is $70,000. If the owner underpaid themselves, the difference is negative and lowers adjusted EBITDA.
Is EBITDA the same as cash flow or profit?
No. EBITDA ignores interest, taxes, equipment purchases and changes in working capital, so it is not the cash left in the bank and it is not GAAP net income. It is useful for comparing operating performance and for pricing a practice, and weak for judging whether you can cover debt payments.
What counts as depreciation and amortization for a practice?
Depreciation spreads the cost of equipment such as lasers, devices and build-out across its useful life. Amortization does the same for intangibles such as purchased goodwill or software development costs. Both are on your income statement or tax return, and neither is a cash payment in the year they are recorded.
Which should I use, net income or revenue?
Use net income if you have a finished profit and loss statement, because the add-backs are easy to find. Use revenue if you are modeling a practice from costs, for example in a budget or a purchase review. Operating expenses in that mode must leave out depreciation, amortization, interest and taxes, or EBITDA will be understated.
Sources and scope
- EBITDA: Definition, formula and limitations. Corporate Finance Institute
Gives both formulas (from net income and from operating profit), the margin approach, and the limits of EBITDA as a non-GAAP measure.
- EV/EBITDA multiple. Corporate Finance Institute
Explains how EBITDA is used to compare and price businesses, the context for adjusted EBITDA in a practice sale.
A math aid, not financial, tax or legal advice. EBITDA is a non-GAAP measure and add-back rules differ by buyer, lender and appraiser. Ask your CPA or broker before relying on an adjusted figure.