EBITDA vs Net Income vs Operating Profit vs. Gross Income - Understanding Profit Measurements

www.corporatefinanceacademy.com
In Corporate Finance there are so many different words used to define profitability... net income, gross income, gross profit, operating margin, net profit, operating income, EBIT, EBITDA, and so on...
In this video we teach you what EBIT and EBITDA mean, talk through some of the differences and also show you a cheat sheet of what each of the profitability metrics are and how you calculate them
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[@tnils234]

This was great! I am trying to learn the language of money and finance in preparation to buy a business and What I learned is don't trust when someone says "but what is their EBITDA?" That only tells one part of the story. It is more important to look at the whole income Statement.

[@nigelhidie9342]

Very helpful content! Thank you very much

[@the2ndgem]

Bro. Thank you. Learning Fundamental Analysis for the first time. You're the best

[@CorporateFinanceAcademy]

great to hear! Please subscribe and check out our other videos!

[@Antnapoli]

This was really helpful all the way to the point where it wasn't clear approximately 10:22 that you need to subtract depreciation and amortization to get to net income. It's not in the example, but maybe that is because it is not always found in the income statement.

[@porporrungwitree]

So helpful! thank you :) This is pretty easy to understand.

[@CorporateFinanceAcademy]

Great to hear!

[@SatishKumar-jb9qm]

Great summary. Thank you!

[@ObadaOmar-lo3se]

very simple explained, thanks (:

[@CorporateFinanceAcademy]

great to hear!

[@m.soares3]

Amazing!!

[@CorporateFinanceAcademy]

Thanks for the kind words!

[@SolarTTauri]

Thank you.

[@CorporateFinanceAcademy]

you're welcome! Be sure to check out our other videos and subscribe!

[@ahappyimago]

Thanks

[@CorporateFinanceAcademy]

Glad it helped!

[@pdn9609]

At 3:40 you say Gross Margin - SGA & R&D Expenses = EBTDA. That implies that that amount includes depreciation & amortization. But then at 9:20 you say Gross Margin - Operating Expenses = EBIT (not EBTDA). That in turn implies that that amount does not include depreciation & amortization.

[@CorporateFinanceAcademy]

Unfortunately, I don't have time to answer every youtube comment question. If you become a paying member on the site, I'd be happy to help out!

[@someonelikeme7551]

That’s because it’s incorrect 😂. It should be EBIT first, then add D&A to get EBITDA

[@westernpacifichvac]

Is there a way to download the master sheet?

[@blixerblacking4211]

Hi, this Question has been bothering me a lot these days, what is the difference between cash flow and net income, I know there is a different between them because of accruals but accruals applied when we receive cash before or after delivering the goods not when at the time of delivering the goods so in case the firm has received an income at the same time of the delivery then there will be no difference between cash flow and net income so my question is why when we calculate equity for in the cash flow statement we also take out net income from the result of changes in both years Ex (income income for 2022 = 1,450 and for 2023 = 2,450) so the diff here is 1,000 but then we also need to take out net income from this result which I don't know why!

[@CorporateFinanceAcademy]

That along with working capital changes are typically the biggest drivers to CFOA. If you check out our video on cash flow you will learn a bit more (start with Net Income, add back depreciation, adjust for working capital) ...

[@gregdanielm]

What did the mouse do to you?

[@CorporateFinanceAcademy]

HAHA! it's actually the keyboard, but we have a long and complicated relationship!

[@rlui8]

what's the story if Ebida is bigger than net income ?

[@izabeladan5994]

well it will always be bigger since ebit is net profit plus tax plus interest.

[@Augustheatsucks]

after calculations net income including depreciation, you add back in EBIDA to the net income.

[@elvispresley3234]

Hmm, at 7:22 you state GM is down 16%. This is incorrect. GM in 2020 actually increased from 45.5% to 48%

[@MrDuds1984]

Ebitda “bullshit earnings” - Charlie Munger

[@CorporateFinanceAcademy]

I’m so happy eveyone reads Munger. It often is BS, but it is widely used, so if you are in finance, you better learn it… and more importantly, learn when and why it is BS!

[@mkh9164]

The last line should be net earning or net profit instead of net income .

[@poppydorning7325]

Saya tidak percaya ia boleh menjadi sebaik ini

[@tommy9x]

10:20 is confused