EBIT vs EBITDA

EBIT minus depreciation and amortization equals nothing. EBIT plus D&A equals EBITDA. That is the entire bridge. Lenders covenant on EBITDA when they want to ignore the D&A timing of acquired intangibles; equity investors lean on EBIT when D&A reflects real maintenance capex needs^{[SEC Non-GAAP]}.

The single line that separates them

Depreciation expense from PP&E plus amortization of acquired intangibles. Both sit inside EBIT but outside EBITDA. The D&A figure usually comes off the cash flow statement (operating section) rather than the income statement, because the income-statement D&A is often buried inside COGS or SG&A and is not separately disclosed.

When to use EBIT

Capital-intensive businesses where maintenance capex roughly equals D&A.
Equity-multiple comparisons (EV/EBIT) for businesses with real asset wear.
Any context where the goal is to penalise asset-heavy firms appropriately.

When to use EBITDA

Lender covenant tests (net debt / EBITDA).
Cross-border comparisons where tax depreciation rules diverge.
Post-acquisition periods where purchase-accounting amortization distorts EBIT.

The bridge in practice

See the EBIT to EBITDA bridge pagefor the worked walker, and the D&A line-itemfor sourcing notes. Tesla FY25 is a useful study because the D&A bridge is large enough to flip the headline.