North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: EBITDA [was Re: Interconnects]
My take on ebitda, it is what non profitable companies use to put a positive spin on their situation. Bri On Mon, 20 May 2002, Chris Woodfield wrote: > The main fallacy of EBITDA is that a lot of people confuse EBIDTA figures with cash > flow figures. While the utility of a quarterly figure showing cash flow P&L, > stripping off all noncash transactions, would be substantial, most companies > prefer to quote EBIDTA instead, which, while disregarding all noncash figures, also > removes interest and taxes as well, both of which are very much recurring cash > expenditures and should be included in cash-flow P&L figures. In the absence of a > cash-flow P/L figure, a lot of people look at EBITDA instead and forget about the > very real cash expenditures involved with interest and taxes (and often other case > expenditures that the company chooses to throw out in order to make the number look > better). > > Intermedia, for example, was EBITDA positive for all of the time I was working for > them, yet was bleeding approx. $100 million plus in interest payments per year. > This created a very real cash crunch that prompted the sale to Worldcom. > > -C > > On Sat, May 18, 2002 at 06:09:56PM -0700, Steve Gibbard wrote: > > > > On Sat, 18 May 2002, Mike Leber wrote: > > > > > press releases regarding their other choices, or perhaps considering > > > whether the companies they consider alternatives are EBITDA postive > > > (making a profit, or in otherwords will exist in 12 months) today (not in > > > an imaginary planned future) or for the few that are EBITDA positive, > > > whether they actually seem to want your business. > > > > "EBITDA positive" does not mean profitable, or even necessarily > > financially stable. EBITDA is earnings before interest, taxes, > > depreciation, and amoritization -- all things that tend to have an impact > > on your finances. If you were using EBITDA as the measure of your > > personal financial situation, you could spend far more than your after tax > > income, but less than your before tax income, and declare yourself to have > > come out ahead. Your bank, however, probably wouldn't see it that way. > > The same goes for corporate finance, except that the corporations that > > were announcing their EBITDA numbers as the important financial data often > > had enough in the bank, and enough market cap, that it didn't become a > > critical problem for a few years. > > > > My understanding is that EBITDA does have legitimate accounting uses, but > > I'm not clear on what they are. > > > > I'm tempted to label this message as off-topic nitpicking, but given that > > the biggest problem with Internet stability at the moment seems to be > > financial, I'm not sure it is. > > > > -Steve > > > > -------------------------------------------------------------------------------- > > Steve Gibbard [email protected] > > >
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