EBITDA VS NET INCOME DETAILED Hello Everyone,🙂
Hope you are fine and doing great today i am again with an idea to give you some knowledge about EBITDA :- Earnings Before Interest, Taxes, Depreciation, and Amortization, So lets Start
What is EBITDA ?
EBITDA is a financial metric that is used to evaluate the financial performance of a company, especially if it is used in the context of mergers and takeover.
How to Calculate EBITDA ?
EBITDA can be calculated by taking a company's revenue and subtracting its operating expenses without including ( interest, taxes, depreciation, and amortization). The resulting number represents the company's earnings before expenses are deducted.
Why Should We Use EBITDA? What is the importance ?
It is frequently used as a measure of any company's cash flow and profitability because it provides us with an indication of how much money the company is generating before non-operating expenses are deducted. However, it's important to note that EBITDA doesn't account for all expenses, such as capital expenditures or changes in working capital, and therefore it should not be used as a sole metric for evaluating a company's financial health.
What is Net Income?
Net income is a financial metric that is reported on a company's income statement, which provides us a summary of the company revenues, expenses, and net income for a specific period. It is an important metric that helps the investors and analysts to evaluate a company's profitability.
How to Calculate Net Income?
It is calculated by subtracting all expenses and deductions from the total revenue earned by the company.
Why Should We Use Net Income? What is the importance ?
It can be used to provide us an indication of a company's profitability, net income is also used to calculate other important financial ratios, such as the earnings per share
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