Home / Uncategorized / Top Five Ways EBITDA Deceives

Top Five Ways EBITDA Deceives

EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) is considered an important metric to look at when one is considering buying a franchise or small business. But hold on, advises this CTP (Certified Turnaround Professional). EBITDA deceives, he says, making the company look better than it really is. He goes so far as to call the metric “a fairy tale.”

EBITDA, that widely-touted measure of company performance and indicator of value otherwise known as earnings before interest, taxes, depreciation, and amortization, is a fairy tale told to investors and credit managers so that they go to sleep happy instead of running for the hills.  … In reality, EBITDA is akin to a blender, into which go normal financial statements and out of which comes a number that always seems to make the subject company look better than it did when the numbers went into said blender.
Let’s take a look at five reasons why relying on EBITDA means buying into a great big lie. — Ted Gavin, Forbes

Full article
Source: Buying a Franchise

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups. I am an author of various websites including Franchise UK https://www.franchise-uk.co.uk

Check Also

Former Hardee's Franchisee Buys 24 Pizza Hut Restaurants

Lisa Albert, an Atlanta businesswoman who formerly owned 25 Hardee’s locations throughout the southeast, has …

Free Franchise Guide

Free Franchising Guide

 

Interested in buying a franchise? The our FREE Franchise Guide is a must! The guide contains lots of information to help you decide if franchising is right for you.

 

To claim your Free Franchise Guide click here