Read more about the article Business Finance | Does EBITDA Bury Its Own Dead?

Business Finance | Does EBITDA Bury Its Own Dead?

Does EBITDA really tell you what you need to know?

“I have enough money to last me the rest of my life … unless I buy something.”–         Jackie Mason

 

Does this sound like you?

Someone recently told me that they’re bored by finance. “Don’t distract me with strategic finance stuff, just let me run my business the way I know how.”

“No problem,” I said, “if you’ll just answer one question. What if the way you’re running it is causing increasing strain on your financial resources, cash flow is dwindling and you’re destroying market value every year. Do you care about any of that?”

“Of course, I do, but when sales start picking up again, all of that will go away and my EBITDA will return to normal levels.”

“Really?” I said. “How do you know that?”

“That’s the way it’s always worked.”

“Have you had any problems with your banking relationship?” (more…)

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Read more about the article People are still – and will always be #1.

People are still – and will always be #1.

Many of you are familiar with my interest in the Corner Office articles appearing in the New York Times on a regular basis. These articles, by Adam Bryant, focus on varying approaches taken by CEOs to lead their organizations.

A recent interview with Fuse founder, Bill Carter, reminds me of two critical variables that are easily lost in our haste to always move to the next issue. First, above all, having the best people is the only antidote to business mediocrity. I’ve said it time and again, and virtually everyone knows this deep down (but very few put it into practice) …  that the organization that excels identifies the best people, makes certain they are properly rewarded, and never stops looking for top talent. (more…)

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Vol. 62: Strategic Finance Fundamentals: It’s time!

“If I am through learning, I am through.”– John Wooden

Some of you will remember – back in the day – the E. F. Hutton commercials that intoned, “When E.F. Hutton speaks, people listen.” (Some of you are probably wondering – who is E.F. Hutton in the first place?) These days, the Sage of Omaha has taken their place and has the ear of many. When I finished re-reading Warren Buffett’s Annual Letter to Shareholders, it resonated with similar messages in a number of recent articles.

What is growth?

From a Wall Street Journal article on March 25 discussing Conoco/Phillips’ future plans: “We asked ourselves, ‘What is growth?’” an executive said. “Growth could be viewed as just growing absolute volumes, but we felt that in this challenging environment what’s really important is to grow the value of the company.”

Or this one, from an article in the April 5 edition of Business Week about the Sears/K-Mart merger: “Simplistic analyses … ignore the fact that negative or below-market returns on invested capital are as harmful to creditors as to shareholders.”

Finally, in Warren Buffett’s shareholder letter, (more…)

Continue ReadingVol. 62: Strategic Finance Fundamentals: It’s time!