Where does EBITDA sit on the Income Statement?

How to find EBITDA in financial statements

EBITDA does not appear as a labeled line item on a standard income statement. Instead, you must calculate it from line items that do appear.

You take Operating Income (EBIT) from the Income Statement and add back Depreciation & Amortization from the Cash Flow Statement. COGS in a standard GAAP Income Statement already includes D&A.

Sometimes you can find EBITDA disclosed in investor presentations or earnings releases. But usually, you would have to calculate it yourself.

Why EBITDA doesn't appear as a line item

EBITDA is a non-GAAP metric. GAAP (Generally Accepted Accounting Principles) does not recognize it as a required disclosure, which means companies are not obligated to report it — and auditors do not sign off on it.

What GAAP does require is Operating Income (EBIT), which appears on every Income Statement. EBITDA is a layer of adjustment on top of that — stripping out Depreciation & Amortization to get closer to operating cash generation.

Because EBITDA is non-standardized, two companies can calculate it differently. Some include stock-based compensation in the add-backs. Others layer in additional adjustments to arrive at "adjusted EBITDA." In M&A, this becomes a negotiating point — sellers push for the highest defensible EBITDA, buyers scrutinize every add-back.

How analysts calculate EBITDA from the income statement

There are two ways to calculate EBITDA.

The standard and more straightforward way starts with EBIT and adds back D&A (sourced from the Cash Flow Statement):

EBITDA = EBIT + Depreciation + Amortization

Or working your way bottoms up from Net Income:

EBITDA = Net income + Interest + Taxes + Depreciation & Amortization

For additional context: Gross Profit sits above EBITDA in the P&L hierarchy. EBITDA comes after Gross Profit. EBITDA sits conceptually above EBIT and Net Income. It captures operating performance before financing costs, taxes, and non-cash charges, but after cost of goods sold and operating expenses.

For a deeper look at how gross profit and EBITDA differ as metrics, see our EBITDA vs. gross profit breakdown.

Why EBITDA matters in M&A and financial analysis

In M&A, EBITDA is the primary valuation anchor. Acquisition prices are typically quoted as a multiple of EBITDA — a business selling for "8x" means the enterprise value is eight times its EBITDA. This convention exists because EBITDA approximates operating cash flow in a way that is capital structure neutral: it excludes interest (which varies depending on how the deal is financed) and taxes (which vary by jurisdiction).

For buyers running LBO models or DCF analyses, EBITDA is the starting point for projecting free cash flow. For sellers, maximizing EBITDA — through legitimate add-backs like one-time costs or non-recurring charges — directly increases the headline multiple and the implied valuation.