I have a question thats been bugging me for a while. What is the difference between operating income and EBIT? is it that EBIT is just operating income + non operating income?
@gwenyi No it is not, Operating Income does not include non-operating expenses (Selling and Administrative Expenses). EBIT on the other hand DOES include it. They are closely related but still different.
@botchalism think you're confused. Gross Income doesn't include SG&A, however Op. Inc. does. This makes sense, SG&A is the cost/expense in supporting the operations of the business, and although SG&A isn't the cost incurred in turning inventory into a recordable sale (that's your COGs) it's function is vital to making the process possible, ergo it's logical that it's included in Inc. from Operations.
@TypicalKid100 If you are referring to Gross Profit (instead of your Gross Income in your comment), we would agree with you. It’s Revenue less COGS = Gross Profit, before SG&A has been subtracted. Operating Income (or EBIT) is Gross Profit less SG&A, ignoring one-time items, etc. EBIT represents the recurring sustainable profitability from core operations. Can you point to where we said Gross Profit includes SG&A being taken out?
@wstss you didn't, believe I didn't read all of one of the comments I replied to, mea clupa. One could argue all day long about EBIT and was always taught situational awareness is the best course in determining the right calc.
@hhaassaann134 EBIT and Operating Income differ in that (at least how I was taught at my bank) EBIT is "scrubbed" of any non recurring expenses/expenses that aren't "good" barometers of the company's assets ability to generating cash flow. E.g. legal fees, stock based compensation, impairments or gains from write down/up of assets, etc.
@TypicalKid100 We don’t disagree with you from the academic perspective; however, from the general finance perspective, EBIT and Operating Income are the considered the same. Different people will have different definitions, no doubt.
thx a million for this video!!
TheStormPulse 6 months ago
I have a question thats been bugging me for a while. What is the difference between operating income and EBIT? is it that EBIT is just operating income + non operating income?
Any help is appreciated
hhaassaann134 1 year ago
@hhaassaann134
No difference!! Both represent the ability of a firm to generate money from its core operations.
asaiqa 1 year ago
@hhaassaann134 it's the same thing.
gwenyi 1 year ago
@gwenyi No it is not, Operating Income does not include non-operating expenses (Selling and Administrative Expenses). EBIT on the other hand DOES include it. They are closely related but still different.
botchalism 3 months ago
@botchalism SG&A is non-operating exp???? Where did you learn that from?
Changtangtang 3 months ago
@botchalism think you're confused. Gross Income doesn't include SG&A, however Op. Inc. does. This makes sense, SG&A is the cost/expense in supporting the operations of the business, and although SG&A isn't the cost incurred in turning inventory into a recordable sale (that's your COGs) it's function is vital to making the process possible, ergo it's logical that it's included in Inc. from Operations.
TypicalKid100 1 month ago
@TypicalKid100 If you are referring to Gross Profit (instead of your Gross Income in your comment), we would agree with you. It’s Revenue less COGS = Gross Profit, before SG&A has been subtracted. Operating Income (or EBIT) is Gross Profit less SG&A, ignoring one-time items, etc. EBIT represents the recurring sustainable profitability from core operations. Can you point to where we said Gross Profit includes SG&A being taken out?
wstss 1 month ago
@wstss you didn't, believe I didn't read all of one of the comments I replied to, mea clupa. One could argue all day long about EBIT and was always taught situational awareness is the best course in determining the right calc.
TypicalKid100 1 month ago
@TypicalKid100 No worries. Please let us know if you have any specific questions or if we made an error. Thanks for watching!
wstss 1 month ago
@hhaassaann134 EBIT and Operating Income differ in that (at least how I was taught at my bank) EBIT is "scrubbed" of any non recurring expenses/expenses that aren't "good" barometers of the company's assets ability to generating cash flow. E.g. legal fees, stock based compensation, impairments or gains from write down/up of assets, etc.
TypicalKid100 1 month ago
@TypicalKid100 We don’t disagree with you from the academic perspective; however, from the general finance perspective, EBIT and Operating Income are the considered the same. Different people will have different definitions, no doubt.
wstss 1 month ago
That was a beautiful explanation. Bravo.
uberathlete 1 year ago
Nicely explained, thanks.
kernel2006 1 year ago
thank you for the lesson
cooombooo 1 year ago
very good job.Can you tell me something about negative beta??
smilekol 2 years ago
Negatively correlated to the market. This could be expressed in a highly exposed gold company theoretically since inverse market/gold relationship.
cammy1989 2 years ago
Thank you very much, its nice to polish up the general understanding!
Zwickelbruch 2 years ago
EBITDA RULES
volta1ree 2 years ago
Good job.
wish2fly321 2 years ago
Fantastic job
motivaters 3 years ago
great explanation ... doesnt get more clear than this ...
mrsuntzu22 3 years ago