EBITDA first became popular in the 1980’s with the rising interest in Leveraged Buyouts. As a financial instrument, EBITDA was particularly useful during this period. It offered a key insight into the potential profitability of companies that were being looked at for acquisition by larger enterprises. Analysts would regularly use it in determining pricing and viability.
Net income has been around for a very long time. In fact, if you look net income up, you will quickly discover that nobody is quite certain when it was first invented. Some maintain that individuals have always used net income to determine their personal profitability the marketplace. There are however, records dating back to before the 1700’s, which show a clear interest in net income as a going concern.
Both EBITDA and net income have been used in differing variants throughout human history to help determine important measurable metrics. These can then be used to alter or improve an existing business model.
With meticulous use of EBITDA and net income, you can create a better financial situation for yourself or your business.