RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Fill me!!Teflon...EBITDA is interchangeable with 'Operating Earnings'. It is the amount of money that the operations of the entity produces without taking into account interest payments, accounting decisions or tax position. The reason why EBITDA is important to Poydras, is that it lets the investor know what the company is able to produce in cash flow, no matter how the company is financed, or what the taxation situation is, or what the depreciation policy is.
It is very difficult to manipulate EBITDA as it reflects the company's actual dollar for dollar performance, whereas Earnings can be played with via tax restructuring, changes in accounting policies, or a variation in how the company is funded.
FOR EXAMPLE:
Look at Poydras' last quarter. They had a tax recovery of $2,302,033. Does that mean that the management performed $2.3M better that quarter? Of course not, that is ridiculous.
What happens if Poydras raised $5 million in equity, and used that money to pay down 12% interest debt, therefore producing $600k more on the bottom line. Does that make them heroes in operating a company better?? Again, of course not.
How about they realize that their slot machines have a useful life 50% greater than they originally predicted? They can then start depreciating their machines over a longer life. This would increase their Net Earnings, but does that mean that they're running a better company. One more time...of course not!!
I'm not saying that EBITDA is the only thing you need to look at as an investor, but to not give it any credibility is being totally naive. It is indeed an indicative factor in company performance, and is the best indication we have on what Net Earnings will be.
When companies look to acquire operating businesses, the methodology most used for acquisition valuation is a multiple of EBITDA. Poydras will be no different.
VeeP