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EBITDA vs Operating Income: main differences



✦ EBIT includes non-operating income in addition to income from operations, while operating income only reflects income from operations.

✦ EBIT assesses a company's overall profit-making ability, while operating income measures the percentage of revenue that can be converted into profit.

✦ EBIT is not an official GAAP measure and can be subject to manipulation, while operating income is an official GAAP measure and is not subject to manipulation.

✦ EBIT allows for adjustments to account for unreported factors, while operating income strictly adheres to GAAP guidelines and cannot be adjusted.

✦ EBIT is calculated by adding interest and taxes to net income and subtracting operating expenses, while operating income is calculated by subtracting overall expenses from gross income.


some elements included in EBIT but not in Operating income may be:

✦ interest income

✦ other income (like rental income)

✦ other expense (like loss on sale of fixed assets)


✍️ EBIT (Earnings Before Interest and Taxes) and Operating Income are both used to evaluate a company's financial performance, but there are some important distinctions between them. One key difference is that EBIT includes non-operating income, such as interest income and gains or losses from the sale of assets, in addition to income from operations, while Operating Income only reflects income and expenses from operations. This means that EBIT provides a more complete picture of a company's overall profitability.


✍️ Another difference is that EBIT measures a company's overall ability to make a profit, while Operating Income measures the proportion of core business revenue that can be converted into profit.


✍️ However, it's important to note that EBIT, contrary to O.I., is not an official GAAP measure and is therefore subject to manipulation. Companies may choose to report EBIT as a supplemental measure of profitability, but it should be used with caution.


✍️ In addition, EBIT allows for adjustments to account for unreported factors, while Operating Income strictly adheres to GAAP guidelines and cannot be adjusted. Some elements that are included in EBIT but not in Operating Income include interest income, rental income, and other non-operating expenses or gains.



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