Comparing Operating Income and EBITDA: Similarities and Differences

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What Is Operating Income?
How Operating Income Is Calculated
What does operating income not include?
Real estate sales Investment income One-time transactions Stock market gains Dividend income Interest income Interest on debt Taxes Lawsuit settlements
What Is EBITDA?
EBITDA vs Cash Flow
How EBITDA Is Calculated
Net income Interest expenses Taxes Depreciation costs Amortization costs
Comparing EBITDA vs Operating Income
Similarities
Both are a measure of a company’s profitability Neither consider the costs of interest and taxes Neither is indicative of a company’s overall financial health
Differences
EBITDA adds depreciation and amortization back to net income: operating income subtracts them from operating revenue EBITDA includes gains or losses from non-operating income; operating income does not Operating income suggests how much profit can be gained from operating revenue if operating expenses are lowered; EBITDA suggests a company’s income potential if certain variables like interest or taxes can be mitigated.
How Operating Income and EBITDA Are Related
EBITDA Formula
How Operating Income Fits Into the Formula
Operating Income vs EBITDA Example
Pros and Cons of Using Operating Income
The Takeaway
3 Small Business Loan Tips
Online lenders generally offer fast application reviews and quick access to cash. Conveniently, you can compare small business loans by filling out one application on Lantern by SoFi. If you are launching a new business or your business is young, lenders will consider your personal credit score. Eventually, though, you’ll want to establish your business credit. SBA loans are guaranteed by the U.S. Small Business Administration and typically offer favorable terms. They can also have more complicated applications and requirements than non-SBA business loans.
Frequently Asked Questions
About the Author
Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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