The difference between EBITDA and EBIT is that Depreciation and Amortization have been added back to Earnings in EBITDA, while they are not backed out of EBIT. This guide on EBITDA and EBIT will explain everything you need to know!

A company while running its business needs to make some operating profits after meeting all its expenses. Operating profits are the ones that are left over after paying for the cost of making a product.

For example the raw material cost, the employee cost, the power and fuel cost, the new purchases, and the other expenses. Thus these are known as operating costs. So whatever is left after subtracting these costs from Sales is known as EBITDA.

Thus EBITDA means Earnings Before Interest, Tax, Depreciation, and Amortization.

EBIT on the other hand takes into account the depreciation and amortization and hence is also known as operating profits as it removes non-cash items from its books that actually remain on the Balance Sheet. Thus the operating profits do not look inflated due to high depreciation or amortization.

EBIT means Earnings before Interest and Tax.