Comments on: Munger on EBITDA http://buyingvalue.com/2009/05/munger-on-ebitda/?utm_source=rss&utm_medium=rss&utm_campaign=munger-on-ebitda Price is What you Pay Value is What you Get Tue, 27 Sep 2011 02:59:03 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: value investor http://buyingvalue.com/2009/05/munger-on-ebitda/comment-page-1/#comment-143 value investor Mon, 01 Jun 2009 05:02:10 +0000 http://buyingvalue.com/?p=417#comment-143 It has it's place- the fear is the liberal manner that the metric is applied. Like any good tool it has its place, all to often with EBITDA though I feel like I am watching someone tighten a screw with a sledgehammer. There are some good metrics like P/E that are easy to understand, EBITDA is not simple though and taken in the wrong context can really cause problems. It has it’s place- the fear is the liberal manner that the metric is applied. Like any good tool it has its place, all to often with EBITDA though I feel like I am watching someone tighten a screw with a sledgehammer.
There are some good metrics like P/E that are easy to understand, EBITDA is not simple though and taken in the wrong context can really cause problems.

]]> By: value investor http://buyingvalue.com/2009/05/munger-on-ebitda/comment-page-1/#comment-132 value investor Sat, 30 May 2009 19:07:57 +0000 http://buyingvalue.com/?p=417#comment-132 relative to EV? Yikes that makes it worse in my opinion EV uses market capitalization so now you are evaluating a company using one metric that says nothing honest about what the company really earns and another that says nothing honest about what the company is truly worth. relative to EV? Yikes that makes it worse in my opinion EV uses market capitalization so now you are evaluating a company using one metric that says nothing honest about what the company really earns and another that says nothing honest about what the company is truly worth.

]]> By: chetan patel http://buyingvalue.com/2009/05/munger-on-ebitda/comment-page-1/#comment-131 chetan patel Sat, 30 May 2009 15:43:34 +0000 http://buyingvalue.com/?p=417#comment-131 why does everyone beat up ebitda so much.you can pick at any metric out there and find faults. so if a firm is based in the US vs being based in bermuda, you will just look at NI when around 25% of the income gets stripped out? if u want to measure cash flow, and the firm times certain wc decisions and securitizes accounts receivables, then is it really that accruate? you are supposed to use ebitda in certain situations for certain reasons. NOT FOR EVERYTHING. if you want to measure true cash flow, use true cash flow. if you want to measure pure earnings then use net income. but if you want to measure firms in different industries and TRY to use as much of an apples to apples comparison, i'll take ebitda. add takeovers and debt service to that. after using ebitda, then what i would do is also use the other metrics to see how some of the other factors come into play. net net, ebitda has faults. i am not saying it doesnt. it has to be used w/ other metrics. just like w/ other metrics, you should also use ebitda why does everyone beat up ebitda so much.you can pick at any metric out there and find faults. so if a firm is based in the US vs being based in bermuda, you will just look at NI when around 25% of the income gets stripped out? if u want to measure cash flow, and the firm times certain wc decisions and securitizes accounts receivables, then is it really that accruate?

you are supposed to use ebitda in certain situations for certain reasons. NOT FOR EVERYTHING. if you want to measure true cash flow, use true cash flow. if you want to measure pure earnings then use net income. but if you want to measure firms in different industries and TRY to use as much of an apples to apples comparison, i’ll take ebitda. add takeovers and debt service to that. after using ebitda, then what i would do is also use the other metrics to see how some of the other factors come into play.

net net, ebitda has faults. i am not saying it doesnt. it has to be used w/ other metrics. just like w/ other metrics, you should also use ebitda

]]> By: Carolyn http://buyingvalue.com/2009/05/munger-on-ebitda/comment-page-1/#comment-96 Carolyn Thu, 21 May 2009 09:27:00 +0000 http://buyingvalue.com/?p=417#comment-96 Charly is right. For most companies, but not all, depreciation is a real cost since machines must be replaced or upgraded over time. And the last time I looked, the IRS wants cash payments. Charly is right. For most companies, but not all, depreciation is a real cost since machines must be replaced or upgraded over time. And the last time I looked, the IRS wants cash payments.

]]> By: Brad Castro http://buyingvalue.com/2009/05/munger-on-ebitda/comment-page-1/#comment-92 Brad Castro Sat, 16 May 2009 14:27:48 +0000 http://buyingvalue.com/?p=417#comment-92 I cringe, too - good post. I cringe, too – good post.

]]> By: John http://buyingvalue.com/2009/05/munger-on-ebitda/comment-page-1/#comment-91 John Sat, 16 May 2009 03:02:50 +0000 http://buyingvalue.com/?p=417#comment-91 Thanks Captain Obvious. It's called looking at EBITDA relative to EV. Thanks Captain Obvious. It’s called looking at EBITDA relative to EV.

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