Understanding EBITDA: What You Need to Know.

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EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, and it's a popular metric in the start-up world.

According to Buffett, relying on EBITDA can be misleading. Why? Because ignoring depreciation and interest can paint an unrealistic picture of a company's profitability.

Depreciation: It's based on assets, and if you want to maintain your business at its current level, you'll need to replace these assets. Ignoring this is a significant oversight.

Interest: Loan interest is a real cash outflow. Not accounting for it can lead to poor financial decisions.

So, what do you think is more important: EBITDA, Net Profit, or Cash Flow? Share your thoughts in the comments!
#finance #startup #EBITDA
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Net Profit & Cash Flow are both important. I always ignore the column where EBITDA is written 😂

TheAkhildogra