EBIT vs Operating Income | Are They Both Same? | Know the Top Differences!

In this video, we will study the top differences between EBIT vs Operating Income.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐄𝐁𝐈𝐓?
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EBIT is an measure used to calculate the profits of a firm.

𝐄𝐁𝐈𝐓 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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EBIT = Revenue – Operating Expenses

Or

EBIT = Net Income + Interest + Taxes


𝐖𝐡𝐚𝐭 𝐢𝐬 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞?
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Operating Income is used to measure the amount of profit earned from the activities of a firm.

𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Operating Income = Gross Income – Operating Expenses

𝐄𝐁𝐈𝐓 𝐯𝐬 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞 𝐊𝐞𝐲 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞𝐬
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#1 - EBIT is used to calculate the firm's profit - making capability.Whereas, Operating income is used to calculate how much revenue can be transformed into profit.

#2 - EBIT is not a official measure of GAAP. Whereas, Operating income is an official GAAP measure.

#3 - EBIT requires certain modifications to be made for items not accounted for. Whereas, there are no such adjustments made in operating income.

If you want to know more about 𝐄𝐁𝐈𝐓 𝐯𝐬 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐈𝐧𝐜𝐨𝐦𝐞 you can visit the 𝐥𝐢𝐧𝐤 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐝 𝐡𝐞𝐫𝐞:-

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