In this video, we'll examine the main differences between EBIT vs EBITDA with its Formula.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐄𝐁𝐈𝐓?
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In accounting and finance, revenues before interest and taxes (EBIT) defined as profit of any firm, including all spending leaving income tax and expenditure on interest.

𝐄𝐁𝐈𝐓 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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EBIT Formula = Operating Revenue – Operating Expenses or OPEX

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐄𝐁𝐈𝐓𝐃𝐀?
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EBITDA, an accounting time span calculated on the basis of the company's net income before the deducted interest, taxes, expenses, amortization and depreciation, is a substitute for the existing operating profitability of a company.

𝐄𝐁𝐈𝐓𝐃𝐀 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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EBITDA = EBIT or Operating Profit + Depreciation Expenditure + Amortization Expenditure
OR
EBITDA = Total Profit + Amortization + Depreciation + Taxes + Interest

𝐄𝐁𝐈𝐓 𝐯𝐬 𝐄𝐁𝐈𝐓𝐃𝐀 𝐊𝐞𝐲 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞𝐬
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#1 - EBIT signifies accumulation-based operating outcomes. Whereas, EBITDA operating results are based on cash flows.

#2 - EBIT shows the operating income of a firm before interest and taxes, but after depreciation. Whereas, EBITDA shows earnings before depreciation or amortization.

#3 - EBIT defines the profit of the company, which includes all expenditure, leaving only the expenditure on tax and interest. Whereas, EBITDA defines the actual operating performance of a company without any hidden expenditure such as amortization, depreciation, tax and interest.

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