how to calculate adjusted ebitda
start by calculating earnings before income taxes depreciation and amortization i e ebitda which begins with a company s net income to this figure add back interest expense income taxes and all non cash charges including depreciation and amortization next either add back non routine expenses such as excessive owner s compensation or deduct any additional typical expenses that would be present in peer companies but may not be present in the company under analysis this could include salaries for necessary headcount in a company that is under staffed for example 