Write the difference between EBITDA and net income.

The major differences between EBITDA and net income are as follows −

EBITA

• It calculates profit making ability of a firm.

• The earning potential of a company can be calculated.

• EBITDA is defined as sum of EBIT, depreciation and amortisation (or) sum of net profit, taxes, interest, depreciation and amortisation.

• Tells about money income generated before expenses (taxes, interests, depreciation and amortisation).

• There is Overstates the cash flow.

• It is used by start-ups.

Net income

• It indicates total earnings of a company.

• It calculates earning per shares (EPS).

• Net income is defined as difference between revenue and cost of doing business.

• It tells about total earnings after reducing expenses (interest, tax, depreciation and amortisation).

• There is no overstates the cash flow.

• It is used by established/grown up company.