What is the Difference between Revenue, Cash Flow and Ebitda
To estimate the performance of the company in terms of sales and progress rate, we look towards three things which are Revenue, Cash Flow and Ebitda. For an ordinary person, these three terms are much confusing and he does not know how to examine the worth and prosperity of a company by means of these three terms. To avoid this confusion and to make clear the concept of people, here is the difference between Revenue, Cash Flow and Ebitda.
Revenue
The term revenue is also known as sales revenue. In simple words, sales revenue is that money which a company generates from selling its products or services. It is very necessary to clear one thing about revenue generation that you can say that amount as revenue, which the customer agrees to pay in return of those products or services which you are offering. Here it is not necessary to have that amount in your hand. Just agreed amount against selling of goods is enough to termed as sales revenue.
Cash Flow
Cash flow is also the money which a company earns by selling its services or products but that money must be in the hands of company in cash form. The term Cash flow is also used for the cash money which goes out of a business. In simple words, it is just the cash amount that actually arrives to the company.
Ebitda
Ebtida is a financial term which is the abbreviation of “Earning Before Interest, taxes, Depreciation and Amortization. The term Ebtida is used to evaluate company’s net profit or financial performance. The simple definition of Ebtida is that it is non-GAAP measure and indicate the net amount or revenue which a company earns by excluding all taxes, depreciation, interest and amortization.
Revenue vs Cash Flow vs Ebitda
The crystal clear difference between revenue and cash flow is that, revenue is that committed amount which a company earns by selling its services or goods but this amount is not in cash form or comes to company’s account. When the earned amount comes to company’s hand or account in cash form from customer side, this income is called cash flow. On the other hand, Ebtida is that net income which a company earns by excluding expenses like taxes, amortization and interests. The terms Ebtida is widely used in stock market just to estimate the compnay’s ability of earning profit.
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