Compare EBIT and operating income.

Question

Compare EBIT and operating income.

Banking & FinanceManagementCompanies/Organisations

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The major differences between EBIT and operating income are as follows −

EBIT

• It 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 income

• It 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.

Mandalika

Published on 27-Jul-2020 11:29:16

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