No. EBITDA and gross profit are not the same metrics. While both metrics can help assess a company’s profitability, they look at various aspects of the financial statement and serve different purposes.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It offers insight into a company’s operational efficiency without unnecessary distractions such as tax expenses, interests, and asset performance. EBITDA formula is as follows:
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
On the other hand, gross profit refers to the profit made by a company after deducting the costs associated with providing its services, including making and selling the product. Gross profit is calculated by subtracting your cost of goods sold from net revenue.
Gross Profit = Net Revenue − Cost of Revenue