Monthly EBITDA Formula

Learn how monthly EBITDA, EBITDA margin, gross profit, and EBIT are calculated from revenue and operating costs.

Monthly EBITDA estimates operating earnings before interest, taxes, depreciation, and amortization. Breaking the calculation into gross profit, operating costs, and non-cash expenses helps make the result easier to reconcile to a monthly income statement.

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Monthly EBITDA

EBITDA = Revenue − Cost of Goods Sold − Operating Expenses + Other Operating Income

Where:

Start with monthly revenue, subtract direct costs and operating expenses that exclude depreciation and amortization, then add recurring other operating income.

Variables Explained

Variable	What It Means	Unit
monthlyRevenue - Monthly revenue	Revenue earned during the month before expenses.	currency
costOfGoodsSold - Cost of goods sold	Direct costs of producing or delivering the goods and services sold.	currency
operatingExpenses - Operating expenses excluding D&A	Recurring operating costs such as payroll, rent, marketing, software, and utilities, excluding depreciation and amortization.	currency
otherOperatingIncome - Other operating income	Recurring operating income not included in revenue.	currency
depreciation - Depreciation	Monthly depreciation expense used to reconcile EBITDA to EBIT.	currency
amortization - Amortization	Monthly amortization expense used to reconcile EBITDA to EBIT.	currency

Step-by-Step Calculation

Calculate gross profit

Gross profit is the revenue left after direct costs of sales.

grossProfit = monthlyRevenue - costOfGoodsSold

Calculate monthly EBITDA

Subtract operating expenses excluding depreciation and amortization, then add other operating income.

ebitda = grossProfit - operatingExpenses + otherOperatingIncome

Calculate EBITDA margin

The margin expresses EBITDA as a percentage of monthly revenue.

ebitdaMargin = ebitda / monthlyRevenue * 100

Combine non-cash expenses

Depreciation and amortization are combined for the EBIT reconciliation.

totalDepreciationAmortization = depreciation + amortization

Calculate monthly EBIT

EBIT includes depreciation and amortization, unlike EBITDA.

ebit = ebitda - totalDepreciationAmortization

Worked example: monthly EBITDA calculation

Monthly revenue$100,000

Cost of goods sold$40,000

Operating expenses excluding D&A$35,000

Other operating income$2,000

Depreciation$3,000

Amortization$2,000

Gross profit

$100,000 - $40,000

$60,000

Monthly EBITDA

$60,000 - $35,000 + $2,000

$27,000

EBITDA margin

$27,000 / $100,000 * 100

27.0%

Total depreciation and amortization

$3,000 + $2,000

$5,000

Monthly EBIT

$27,000 - $5,000

$22,000

Final Result

Estimated monthly EBITDA is $27,000, with a 27.0% EBITDA margin and monthly EBIT of $22,000.

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Assumptions

✓All inputs cover the same monthly accounting period and accounting basis.
✓Operating expenses exclude depreciation and amortization to avoid double counting.
✓Other operating income is recurring and operational rather than non-operating.
✓Interest, income taxes, and non-operating gains or losses are excluded.

Limitations

!EBITDA is not defined identically by every business, lender, investor, or accounting framework.
!Revenue recognition, accruals, and timing differences can make calculator results differ from reported figures.
!One-off items and management adjustments are not separately identified by the calculation.
!A positive EBITDA result does not measure cash flow, working capital needs, debt payments, or taxes.

Common Mistakes to Avoid

Including depreciation or amortization in operating expenses and entering them again in their separate fields.

Using invoices issued instead of revenue recognized for the same accounting period.

Treating loan interest, tax expense, or asset sale gains as operating expenses or income.

Comparing EBITDA margins across businesses with different revenue recognition or expense classifications.

Using a zero-revenue month to interpret an EBITDA margin; the percentage is not meaningful when revenue is zero.

Related Formulas

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Frequently Asked Questions

What is the formula for monthly EBITDA?

Monthly EBITDA equals revenue minus cost of goods sold, minus operating expenses excluding depreciation and amortization, plus other operating income.

How is EBITDA margin calculated?

Divide monthly EBITDA by monthly revenue and multiply by 100. For example, $27,000 of EBITDA on $100,000 of revenue is 27.0%.

Why are depreciation and amortization excluded from EBITDA?

They are excluded by definition from EBITDA, but they are deducted afterward to reconcile EBITDA to EBIT.

Is EBITDA the same as operating income?

Not usually. EBIT is commonly closer to operating income because it includes depreciation and amortization, while EBITDA adds those expenses back.

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