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EBITDA really indicates a good performance?
If in the absence of other considerations, EBITDA can provides an incomplete and dangerous picture of financial health?
1 Answer
- 1 decade agoFavorite Answer
You need to have comparison charts between years in order to understand if the company is healthy or not.
You might have this year's blue numbers but the last 3 consecutive years were red. EBITDA would just tell you how you did this period.
Also, your taxes and interests could be higher than the cashflow liquidity you might have in your earnings.
Do an accounting acid test. That way you are certain.
Good luck.
