What is the difference?

EBITDA vs Revenue

Earnings Before Interest, Taxes, Depreciation, and Amortization

Revenue

What is it?

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is one of a few profit metrics. At its simplest, EBITDA focuses only on operational profitability, ignoring non-cash expenses by adding them back to Net Income.

Revenue is defined as the income generated through a business’ primary operations. It is often referred to as “top line” and is shown at the top of an income statement.

Who is it for?

Accountant

Chief Financial Officer

Financial Analyst

Bookkeeper

Chief Financial Officer

Chief Revenue Officer

Formula

ƒ Sum(Net Profit + Interest + Taxes + Depreciation + Amortization)

ƒ Sum(Revenue)

Example

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization If a company has: $50 million in Revenue $10 million in Costs of Goods Sold (COGS) $15 million in Operating Expenses $5 million Depreciation and Amortization Expense $2 million in Interest Expense $3 million in Taxes Net Income = 50 - 10 - 15 - 5 - 2 - 3 = $15 million EBITDA = $15 + 2 + 3 + 5= $25M

If a customer signs an annual contract for $12,000 consisting of monthly payments, then the revenue for each month of that year is $1,000, and the revenue for that year is $12,000.