EBITDA

This topic has 3 replies, 2 voices, and was last updated 13 years ago by Ken Garrett.

Viewing 4 posts - 1 through 4 (of 4 total)

Author
Posts
November 5, 2012 at 4:00 pm #55043
ddnguyen
Member
- Topics: 27
- Replies: 47
Hi tutor
Could you tell me the disadvantages of EBITDA
Thanks tutor alot
November 5, 2012 at 8:43 pm #106582
Ken Garrett
Keymaster
- Topics: 10
- Replies: 10659
Ignores changes in working capital
Does not make allowance for replacement of non-current assets
Susceptible to manipulation – as are all profit-based measures.
November 6, 2012 at 10:00 am #106583
ddnguyen
Member
- Topics: 27
- Replies: 47
could you explain more detailed about ” Does not make allowance for replacement of non-current assets”?
thanks alot
November 6, 2012 at 3:30 pm #106584
Ken Garrett
Keymaster
- Topics: 10
- Replies: 10659
Well, EBITDA is, by definition, before depreciation. Yet enough profit/cash has to be retained to replace non-current assets when they wear out. EBITDA might overstate how an organisation is doing because it does not charge for the wearing out of non-current assets.
Author
Posts

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic.