Wired Discovers EBITDA

from the oh,-the-horror dept

If you’ve ever taken an accounting or finance class, you should know what EBITDA is. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Basically, it shows you what’s really going on inside a corporation – how they’re making money from their actual operations. As such, it’s a very useful figure in seeing how a company does. Some reporter at Wired, however, has apparently just discovered it and has decided, instead, that it’s a useful tool for companies to lie about their financial performance. Oh my! Those crazy companies. Someone sign that reporter up for an accounting class. The only valid point the reporter makes is that it can be a little confusing since many companies use multiple methods to calculate different financial reports – and different companies and analysts report different numbers using different methods. While this can be confusing if you don’t follow the small print, an educated investor can certainly figure out what’s going on.

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