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.

#### 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.

#### Published and updated dates

Date created: Oct 12, 2022

Latest update: Mar 7, 2024

Date created: Oct 12, 2022

Latest update: Oct 12, 2022