Should investors use EBITDA – or is it a folly?

“I think that, every time you see the word EBITDA, you should substitute the word ‘bulls**t earnings’.” — Charlie Munger

The earnings before interest, taxes, depreciation, and amortization, or EBITDA metric has its uses, and has become an extremely popular standard to measure business performance. However, the figure is highly misleading, it’s easy to manipulate and should be taken with a pinch of salt. (The same can be said for almost all financial figures and metrics, but few are as easily and frequently manipulated as EBITDA.)

– See more at: http://www.stockopedia.com/content/should-investors-use-ebitda-or-is-it-a-folly-89778/#sthash.YLrua1Pe.dpuf

Leave a Reply