EBITDA is an acronym that stands for:
Earnings
Before
Interest
Taxes
Depreciation
Amortization
What is EBITDA?
Why is it important?
EBITDA is an acronym that stands for:
Earnings
Before
Interest
Taxes
Depreciation
Amortization
EBITDA is not a number that you will typically see on a company’s financial statements
It’s a measure that companies calculate separately in a 10K filing or one that you could calculate yourself
You probably have a good idea of what “Profit” is
Profit is what is left over after deducing expenses from a
company’s revenue
You can calculate it as follows:
1) Start with Net Profit
2) Add: Interest, Taxes, Depreciation, Amortization
3) The result is EBITDA
There is no right answer here. It depends on what you’re measuring
I’m fully expecting commentators in this thread quoting Warren Buffet to me saying something along the lines of “EBITDA is a useless measure”
(i) who invented EBITDA
(ii) who uses EBITDA
EBITDA was invented by someone who you've probably never heard of but has had a huge impact on your life: John Malone
John Malone is a billionaire cable operator and investor
So he convinced his investors and lenders to focus on “cash flow” and ignore earnings
By simply focusing higher up the income statement - that’s how he invented EBITDA
From personal experience working in equity research
I can tell you that valuations multiples using EBITDA are more frequently used than valuation multiples using earnings
Focus on EBITDA, not earnings
Why is this?
This means EBITDA doesn’t care about how much debt you use to finance your business (that’s why you add back interest)
Let’s look at an example to understand this better:
Company A and Company B
Both companies are exactly the same in every aspect:
(i) same industry
(ii) same financial performance
(iii) same size
Company B doesn’t raise money but instead uses debt and makes $90K in profit/year after deducting $10K in interest costs per year
Is Company A better than Company B?
• Company A used equity
• Company B used debt
Funding decisions are not fixed and to a certain extent could be changed
Company B decided not to dilute shareholders and use debt
There is nothing stopping Company B from:
• Raising money from investors
• Paying back the debt it carries
• Be as profitable as Company A
EBITDA adjusts for how a company is funded making comparisons on an apples-to-apples basis
1. EBITDA is a non-GAAP measure
2. You can calculate EBITDA yourself
3. EBITDA is more frequently used than earnings for valuations
4. EBITDA is an un-levered measure
5. EBITDA ignores how a company is funded
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Viruses and other pathogens are often studied as stand-alone entities, despite that, in nature, they mostly live in multispecies associations called biofilms—both externally and within the host.
https://t.co/FBfXhUrH5d
Microorganisms in biofilms are enclosed by an extracellular matrix that confers protection and improves survival. Previous studies have shown that viruses can secondarily colonize preexisting biofilms, and viral biofilms have also been described.
...we raise the perspective that CoVs can persistently infect bats due to their association with biofilm structures. This phenomenon potentially provides an optimal environment for nonpathogenic & well-adapted viruses to interact with the host, as well as for viral recombination.
Biofilms can also enhance virion viability in extracellular environments, such as on fomites and in aquatic sediments, allowing viral persistence and dissemination.
Viruses and other pathogens are often studied as stand-alone entities, despite that, in nature, they mostly live in multispecies associations called biofilms—both externally and within the host.
https://t.co/FBfXhUrH5d
Microorganisms in biofilms are enclosed by an extracellular matrix that confers protection and improves survival. Previous studies have shown that viruses can secondarily colonize preexisting biofilms, and viral biofilms have also been described.
...we raise the perspective that CoVs can persistently infect bats due to their association with biofilm structures. This phenomenon potentially provides an optimal environment for nonpathogenic & well-adapted viruses to interact with the host, as well as for viral recombination.
Biofilms can also enhance virion viability in extracellular environments, such as on fomites and in aquatic sediments, allowing viral persistence and dissemination.
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I’m torn on how to approach the idea of luck. I’m the first to admit that I am one of the luckiest people on the planet. To be born into a prosperous American family in 1960 with smart parents is to start life on third base. The odds against my very existence are astronomical.
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
Ironies of Luck https://t.co/5BPWGbAxFi
— Morgan Housel (@morganhousel) March 14, 2018
"Luck is the flip side of risk. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people\u2019s actions can be more consequential than your own."
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
Great article from @AsheSchow. I lived thru the 'Satanic Panic' of the 1980's/early 1990's asking myself "Has eveyrbody lost their GODDAMN MINDS?!"
The 3 big things that made the 1980's/early 1990's surreal for me.
1) Satanic Panic - satanism in the day cares ahhhh!
2) "Repressed memory" syndrome
3) Facilitated Communication [FC]
All 3 led to massive abuse.
"Therapists" -and I use the term to describe these quacks loosely - would hypnotize people & convince they they were 'reliving' past memories of Mom & Dad killing babies in Satanic rituals in the basement while they were growing up.
Other 'therapists' would badger kids until they invented stories about watching alligators eat babies dropped into a lake from a hot air balloon. Kids would deny anything happened for hours until the therapist 'broke through' and 'found' the 'truth'.
FC was a movement that started with the claim severely handicapped individuals were able to 'type' legible sentences & communicate if a 'helper' guided their hands over a keyboard.
For three years I have wanted to write an article on moral panics. I have collected anecdotes and similarities between today\u2019s moral panic and those of the past - particularly the Satanic Panic of the 80s.
— Ashe Schow (@AsheSchow) September 29, 2018
This is my finished product: https://t.co/otcM1uuUDk
The 3 big things that made the 1980's/early 1990's surreal for me.
1) Satanic Panic - satanism in the day cares ahhhh!
2) "Repressed memory" syndrome
3) Facilitated Communication [FC]
All 3 led to massive abuse.
"Therapists" -and I use the term to describe these quacks loosely - would hypnotize people & convince they they were 'reliving' past memories of Mom & Dad killing babies in Satanic rituals in the basement while they were growing up.
Other 'therapists' would badger kids until they invented stories about watching alligators eat babies dropped into a lake from a hot air balloon. Kids would deny anything happened for hours until the therapist 'broke through' and 'found' the 'truth'.
FC was a movement that started with the claim severely handicapped individuals were able to 'type' legible sentences & communicate if a 'helper' guided their hands over a keyboard.
