EV / EBITDA is the multiple. These terms are referenced constantly in the financial press and research reports, so it is imperative to understand the differences between these three terms. EBIT = Operating Income on the Income Statement. Operational efficiency should be increased by minimizing costs and wastage in order to increase the operating income. Operating Income = Revenue – COGS – SG&A – Depreciation – Amortization. The difference between operating income and net income should be clearly distinguished in order to understand the effects one has on the other.

There were three important terms that popped up in this income statement: 1) Gross Profit, 2) Operating Profit, and 3) Net Income.
EBITDA = Operating Income on the Income Statement + Depreciation & Amortization from the CFS.

Net Operating Income should also be distinguished from Net Income which is the Net Operating Income adjusted for the after-tax effect of financial leverage, non-operating and exceptional items and minority interest, if necessary. Operating income differs from net income in that net income may include sources of income other than operations, such as interest income. EBITDA corresponds to Enterprise Value.

EBITDA vs. Net Profit When analyzing the financial health of your company, these financial terms are two key indicators which provide valuable information. Operating Income = EBITDA – Depreciation – Amortization. The main difference between EBITDA and Operating Income is that EBITDA measures a company’s profitability and helps to determine a business’ earning potential while operating income measures a company’s profit after subtracting operating expenses including outgoing general and administrative costs.. The income for any organisation can be classified into two categories - Operating income and non operating income. For example, if an investor expresses his interest in your business, he will make the comparison between EBITDA and Net Profit in order to get the bigger picture of your company’s status.


They Correspond To… EBIT corresponds to Enterprise Value. Summary – Operating Income vs Net Income. Net Income = Net Income on the Income Statement. EV / EBIT is the multiple. We will also introduce a new metric, EBITDA.


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