EBITDA tells you how the operations did. Not what the owner keeps.
It strips out the capital structure and the capital intensity. Asset light, the gap is small. Capital heavy, the gap is the whole story.
01
EBITDA is earnings before interest, tax, depreciation and amortisation. Which is to say, before four of the biggest bills a business pays. Read down to net profit before you call a margin fat.
02
The gap between EBITDA and net is the cost of the assets and the debt. Same 280 of EBITDA, an asset light firm keeps 68 of every 100, this heavy one keeps 11. That gap is the business model, not a rounding error.
03
A low price on EBITDA is not cheap if depreciation and interest eat most of it. Check the same company on earnings and on cash before you call it a bargain.
EBITDA is the profit a business would earn if the machines ran for free and the loan never came due. Neither is true. Read the line at the bottom, not the one on the slide.
Learn to read the statement before the slide reads it to you.
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