RE:RE:RE:Guess who's back, back again"Your argument against ebitda is flawed bs.....it doesn't matter what metric you use to measure profitabilty as long as you use a compatible multiple to calculate fair value.." There is only one measure of profitability, and that is profit. If you want to buy a money losing company and then ignore those thing that make your numbers negative then you are free to do that. Then if you want to multiply that new created positive number by another made up number to make it a bigger fictitious number then you are free to do that too. After it is all said and done though you are still losing your shirt just as fast as you did before you started playing your silly little game.
EBITDA at one time used to be a useful tool in the 80's M&A game when you wanted to unplug many of the expenses of that specific company and plug in your own to see if their business would be much better than it presently appears if it was flying under your wing, but once it became adopted by con men it has morphed into a means to rip off those people who do not know the first thing about running a business. Try running a taxi cab company without taxi cabs because their cost is not included in your lofty EBITDA number. Try telling the bank you are not paying the interest charges on your loan to run your business because it is not a real number in your fantasy-land accounting...Just try it. You do pay those things and a whole lot more so you do not exclude any of them when discussing the state of your business unless your game is to deceive those people that are willing to believe that certain mandatory business expenses are actually paid for by the tooth fairy.
I think that, every time you see the word EBITDA, you should substitute the word ‘bullshit’ earnings.
Charlie Munger
People who use EBITDA are either trying to con you or they’re conning themselves.
Warren Buffett
https://community.bus.emory.edu/club/GIM/Shared%20Documents/Putting%20EBITDA%20Into%20Perspective.pdf