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It's not a terrible metric. It's only bad for companies who have high debt loads, or companies who have to periodically upgrade costly equipment. These downsid
by dismantlethesun 9y ago
It's not a terrible metric. It's only bad for companies who have high debt loads, or companies who have to periodically upgrade costly equipment.
These downsides to EBITDA are well known and should weigh on the mind of anyone who looks at the metric.
For a company that rents all its equipment, EBITDA is a pretty good metric.
- dragonwriter 9y ago> It's not a terrible metric. It's only bad for companies who have high debt loads, or companies who have to periodically upgrade costly equipment. Right, ignoring depreciation and debt service is only horrible for assessing companies with significant depreciation or debt service. > For a company that rents all its equipment, EBITDA is a pretty good metric. Sure, if you don't have significant depreciation/amortization and debt service, EBITDA is just an approximationation of EBT, which is a perfectly good measure. And EBT's a perfectly good measure even for companies with debt service and depreciating equipment.