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: Feb 17, 2019

Latest update: Aug 26, 2021

Date created: Feb 10, 2019

Latest update: Oct 19, 2021