EBITDA measures the operating profit and thus shows the profitability of a business. The key difference between EBIT and EBITDA is that EBIT deducts the cost of depreciation and amortisation from net profit, whereas EBITDA does not.
Profit before Interest, Taxes, Depreciation, and Amortisation
EBITDA is calculated by deducting all operating and non-operating expenses except interest, taxes, depreciation and amortisation from revenue.
- Expenses (interest, taxes, depreciation and amortisation included)
The previous year a company had revenue of €440,000 and expenses of €410,000. EBITDA will therefore be €30,000.