The major differences between EBITDA and net income are as follows −EBITAIt calculates profit making ability of a firm.The earning potential of a company can be calculated.EBITDA is defined as sum of EBIT, depreciation and amortisation (or) sum of net profit, taxes, interest, depreciation and amortisation.Tells about money income generated before expenses (taxes, interests, depreciation and amortisation).There is Overstates the cash flow.It is used by start-ups.Net incomeIt indicates total earnings of a company.It calculates earning per shares (EPS).Net income is defined as difference between revenue and cost of doing business.It tells about total earnings after reducing expenses (interest, tax, depreciation ... Read More

The major differences between EBIT and EBITDA are as follows −EBITEBIT refers to Earnings Before Interest and Tax.It measures company’s profit.Operation results are represented on accrual basis.EBIT is defined as difference between revenue and operating expenses.Depreciation/amortisation is taken into account.When capital intensive is less, financial markets gives priority to this ratio.EBITDAEBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation.It measures actual operating performance of a firm.Operation results are represented on cash flow basis.EBITDA is defined as difference between revenue and operating expenses.Depreciation/amortisation are not taken into account.When sectors are capital intensive, financial markets will emphasize this.Read More

The major differences between EBIT and operating income are as follows −EBITIt calculates company’s profitability.It is used to understand the company’s profit making capacity.It is not recognised by GAAP.The adjustments are made.The non-operated expenses are also considered.It is not reported in financial statements.Operating incomeIt calculates profit gained through operations.It is used to know company’s capacity to convert their revenues into profit.It is recognised by GAAP.There is no need for adjustments.Only operating expenses are considered.It is reported in the financial statements.

The major differences between EBIT and net income are as follows −EBIT (Earnings before Interest and Taxes)It evaluates profits earned through an entity.An operating income earned by an entity before adjustments (interests and taxes) is EBIT.The main purpose is to determine profit earning of an entity.EBIT can be defined as difference between revenue and operating expense (or) sum of net income, interest and taxes (or) difference between Earnings Before Interest Tax Depreciation and Amortisation (EBITA) and depreciation, amortisation expensesIt is used by governments, equity holders and debt holders.Interest and expenses incurred are not considered.Cost of operating business is ignored.Operating expenses ... Read More

The major differences between joint venture and partnership are as follows −Joint VentureIt is a trade formed by two or more individuals.The duration of time is fixed.The parties are called Co-Ventures.The profit/loss are distributed on interim basis.There are no specific governing laws.A specific name is not required.The accounts may/may not be separately maintained.It follows liquidation accounting.It includes profit-seeking ventures.A minor is not accepted as a Co-Venturer.PartnershipIt is an agreement made by two or more individuals having respective proportionate shares to start a business.The duration of time is not fixed.The parties are called partners.The profit is distributed annually.It is regulated by ... Read More

The major differences between direct tax and indirect tax are as follows −Direct TaxIndirect TaxIt is the tax on income/profits.Individuals, firms, companies pay direct taxes.It is applicable to taxpayer.It is burden on individual.It can’t be transferred to others.It covers an entity/individual.It has high administrative cost.Tax evasion is possible.It includes good allocative effects (less burden).It may reduce inflation.It results in lesser savings, investments demoralising.The mode of progress is progressive.It is difficult to collect taxes.It includes income tax, wealth tax and corporate tax.It is the tax on goods and services.End consumer of service/goods are taxpayers.It is applicable at each stage of production/distribution ... Read More

The major differences between bidding and auction are as follows −BiddingBuyer buys the commodity by offering a bid/price.It includes competitive offer for a product/service.It shows value/demand for a product/service.The main aim is to win the contract/bid that put for an auction.It creates competition to increase demand for a commodity.For organisations, bids are allotted for lower bid with proper quotations and paper works.AuctionIt is held to get better value for goods/service sold.It is the process of buying/selling.Bidders are allowed to place the bid and highest bidder will be allotted the goods/services.The main aim is to get best/highest price for a good/service.The ... Read More

The major differences between investment and speculations are as follows −InvestmentPurchasing an asset/security for good returns is termed as an investment.It is long term and has moderate risk.Investors will go for the cautions and conservative approach.The decision is made on financial performance of a company.The returns are modest and continuous.It is used for self.Examples &minnus; stock markets, bonds, mutual funds etc.SpeculationsA risky financial transaction for high profits is termed as speculation.It is short term (less than a year).An investor will go for an aggressive approach.The decision is made on technical charts, market psychology and individual decisions.It excepts return at high ... Read More

The major differences between interest rate and annual percentage rate are as follows −Interest rateIt is used to calculate monthly payments/EMIs of loans.It relates to cost of borrowing.The formula to calculate the interest rate is as follows − A = P(1+rt), where, A implies simple interest, P for principle amount, r for interest rate, t is time period.It impacts outstanding debt amount.The high interest rates are preferred.Annual percentage rateIt provides full information on principle amount which reflects cost of loan.It relates to total cost of loan.The formula to calculate annual percentage rate is as follows − Annual percentage rate = ... Read More

The major differences between industry and sector are as follows −IndustryIt includes group of organisation/firms who produces similar products/goods.It comprises grouping of companies/enterprises based on their business activities.It is categorised based on their process.The scope is narrow and it has a specific term.There are different firms which can for form cluster.It is ranked after sector.It has specific analysis view.Examples − manufacturing industry, extractive industry, construction industry etc.SectorIt includes business groups, which are having similar services/products.It comprises of entities/companies having similar processes/product line/operating activities.It is categorised based on business activities.It has wide scope and a general term.Industries combined to form sectors.It ... Read More