EBITDA vs Operating Income | Top Differences You Must Know!

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

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐄𝐁𝐈𝐓𝐃𝐀?
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EBITDA is a approach often used to to find the profit of firm and industries.

𝐄𝐁𝐈𝐓𝐃𝐀 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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EBITDA = EBIT + Depreciation + Amortization
OR
EBITDA = Net Profit + Taxes + Interest + Depreciation + Amortization

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞?
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Operating income is often used to determine how much of the company's profits can be transformed into revenue.

𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Operating income = Gross income – Operating expenses

𝐄𝐁𝐈𝐓𝐃𝐀 𝐯𝐬 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞 𝐊𝐞𝐲 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞𝐬
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#1 - EBITDA is used to examine and equate companies. Whereas, operating income is the revenue that is considered as income from operations.

#2 - EBITDA is not a official measure of GAAP. Whereas,Operating income is an official GAAP measure.

#3 - EBITDA calculate firm's earning potential.Whereas, Operating income ascertain how much profits can be transformed into revenue.