Why Charlie Munger HATED EBITDA

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👨‍💼Brian Stoffel is a writer, investor, YouTuber, and financial educator. He's a teacher at heart. Brian has been investing for over a decade and has written over 4,000 articles for The Motley Fool. Brian plans his life and his investments around “antifragile” principles.

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0:00 Intro
0:26 What is EBTIDA?
3:20 What is EBITDA popular?
5:55 Why Munger HATES EBITDA

[vincentf.]

Actually, I knew that EBITDA is widely used, and that both Buffett and Munger disliked it, always wondered why. Thanks for the clarification!!

[bacchuslax]

Specifically says it does NOT complain with generally accepted accounting principles. Yet people go straight to it. Might as well say we’re hiding the debt but it’s still profitable

[davidreichert]

I first learned about EBITDA when the CEO of my company used it in a presentation. For the life of me I couldn't understand why people would want a number that ignores expenses. Seemed to me like a dodgy way to overstate profits. Turns out my instinct was right.

[robkennedy]

Also, EBITDA does not consider working capital requirements. A company can make lots of earnings but be illiquid as they do not have the cash required to operate.

[richardgordon]

Really love videos like this! Interesting, informative and clearly explained 😊

[johnwasilenko]

Great summary of why Wall St sell side uses EBITDA for specific industry stock price valuation and targets while long term investors should be quite skeptical of this ploy

[JD-imwu]

...yet u still see "CFA"s who base all their valuation on EBITDA on youtube for years posing as stock analysts "for" investors. tsk tsk Cameron

[osunaedgar]

Well explained..! IMHO the background music becomes a nuisance after a while...

[bonsai]

Hey, Brian, can you do a video on why you have Cloudflair on a short leash? Appreciate you.

[m_c_]

Wut he like den? Do he go wit operational cash flow, free cash flow ?

[szymonc]

Yeah well if you’re pure minority stock investor then yes, EBITDA does give you much insights as you’re probably more into net income (dividends) and free cash flow (whether company has enough resources to grow). But let’s be honest, if you’re buying companies out then you look at EBITDA because you don’t give a shit about capital structure or tax costs. You want to see how strong earnings the business can generate which tells you a lot about its performance

[cassbielski]

Aren’t owner earnings a lot like EBITDA?

[yashagar]

Depreciation and amortization are cash expenses

[TheBommel]

I thought this was a diary of a CEO video because of the same thumbnail style you copied

[Tuberis]

Very nice. I would skip the music and slow down the pace of speech if I were you.

[CP-oomj]

So much wrong information in your video, don't know where to start...