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A comment on Getting price-gouged by private equity in the UK's happiest resort (2023).

Re:Getting price-gouged by private equity in the UK's happie... by blitzar on Tuesday September 03, 2024 @06:35AM (#41433396)
This is really a story about EBITDA.

"People who use EBITDA are either trying to con you or they're conning themselves."

[ Parent | on HN ]
Re:Getting price-gouged by private equity in the UK's happie... by dmurray on Tuesday September 03, 2024 @08:02AM (#41434085)
It's just one measure of profitability. Is it a con to report a business's gross revenue? Hardly.

It has a useful meaning in its context. If you're going to value a business based on a single number, your problems can't be fixed by blaming the number.

[ Parent | on HN ]
Re:Getting price-gouged by private equity in the UK's happie... by kamaal on Tuesday September 03, 2024 @07:20AM (#41433704)
Im not able to see the context here.

How is it a con?

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Re:Getting price-gouged by private equity in the UK's happie... by rwmj on Tuesday September 03, 2024 @07:32AM (#41433812)
It's known colloquially as "Earnings before bad stuff" because you can use it to hide all the stuff in your accounts that doesn't make you look good. It's not a con, more like obfuscation.
[ Parent | on HN ]
Re:Getting price-gouged by private equity in the UK's happie... by dspillett on Tuesday September 03, 2024 @07:37AM (#41433842)
> It's not a con, more like obfuscation.

Which is a very subtle and complex distinction, like the difference between tax evasion and tax avoidance.

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Re:Getting price-gouged by private equity in the UK's happie... by ggm on Tuesday September 03, 2024 @08:03AM (#41434090)
Feather? Legal. Whole bloody chicken? Pornography.
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Re:Getting price-gouged by private equity in the UK's happie... by dspillett on Tuesday September 03, 2024 @10:14AM (#41435187)
Nah, the feather is erotic, the chicken is kinky. Both legal by my understanding. Unless the chicken is live.
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Re:Getting price-gouged by private equity in the UK's happie... by refurb on Tuesday September 03, 2024 @08:57AM (#41434510)
It's one of many metrics that you can use to evaluate a business.

Note that's it's not "bad stuff", it's interest, taxes, depreciation and amortization.

I'm not sure anyone consider depreciation bad?

It's a metric that strips away things that can distort net income. It allows one to see what the core business produces.

[ Parent | on HN ]
Re:Getting price-gouged by private equity in the UK's happie... by indymike on Tuesday September 03, 2024 @07:46AM (#41433932)
It's not if you use it to understand cash flow. If you use it as a profit replacement, you might be disappointed.
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Re:Getting price-gouged by private equity in the UK's happie... by blitzar on Tuesday September 03, 2024 @07:29AM (#41433789)
https://brk-b.com/why-charlie-munger-despised-ebitda_240201....
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Re:Getting price-gouged by private equity in the UK's happie... by pbhjpbhj on Tuesday September 03, 2024 @07:00AM (#41433550)
https://en.wikipedia.org/wiki/Earnings_before_interest,_taxe...

Earnings Before Investment Taxes Depreciation & Amortisation

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Re:Getting price-gouged by private equity in the UK's happie... by scoot on Tuesday September 03, 2024 @07:19AM (#41433703)
"earnings before interest, taxes, depreciation, and amortization"
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Re:Getting price-gouged by private equity in the UK's happie... by thelynchmob1 on Wednesday September 04, 2024 @05:03AM (#41443460)
Author of the article here -- kind of, but the idea here was just to write a piece about a capital-intensive business compared to the couple of capital-light businesses I'd covered in the prior articles I wrote, and how that difference in capital requirements plays through the P&L, balance sheet and cash flow statement. One effect of capital intensity is that EBITDA becomes a less useful measure, sure. Another effect is that the cashflow statement becomes incredibly important to running the business, as does understanding the difference between maintenance capex and growth capex.
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