EBITDA is not performance.
It’s financial comfort food.
Feels good. Adds no real value.
Here’s the uncomfortable truth:
EBITDA is often used to make bad businesses look fine on paper.
But it won’t tell you:
✕ If you’re covering the true cost of capital
✕ If equity holders are earning a return
✕ If your business is quietly destroying value
It’s just EBIT with depreciation and amortization slapped back on —
Like repainting a sinking ship.
You want real answers?
Use EVA to ask:
→ Are we beating our total cost of capital?
Use RI to ask:
→ Are equity investors earning a premium?
Use EBITDA to ask:
→ How fast can we lie to ourselves?
Here’s the rule:
✓ Use EVA to measure company-wide value
✓ Use RI to evaluate business units
✕ Use EBITDA for quick ops checks — then move on
Stop dressing up EBIT and calling it strategy.
Start measuring value - not optics.
https://tinyurl.com/4k8s9cy4