EBIT Vs. EBITDA
EBIT (Earnings Before Interest and Taxes) is a measure of a company’s profitability that indicates how much profit it generated from its operations before taking into account interest expenses and taxes. It is calculated by subtracting operating expenses (such as selling, general, and administrative expenses) from a company’s revenue.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) indicates the amount of cash generated by a company’s operations before taking into account interest, taxes, depreciation, and amortization expenses. EBITDA is calculated by adding back the non-cash expenses of depreciation and amortization to EBIT.
EBITDA = EBIT+ Depreciation and Amortization