Write the difference between EBITDA and net income.

Banking & FinanceManagementCompanies/Organisations

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


  • 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.

Published on 27-Jul-2020 11:31:34