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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.