Corporate finance on 'Fighting EBITDA'

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Date: On Demand
Location: Online na na

Professor Chris Higson explained why EBITDA is a number that needs handling with great care – it is not a proper measure of profit, nor of cash flow.

It can make unprofitable businesses look profitable and, moreover, is very vulnerable to creative accounting. It completely ignores the balance sheet and the cost of the assets you need to run the business – as Warren Buffett put it: Does management think the tooth fairy pays for capital expenditures?