He saw it coming ….
When someone tells you no one saw it coming ... you can usually assume they mean "I" didn't see it coming. By now, many of you are familiar with the…
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…)
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…)
Not that I told you so … redux!
Remember this line? “There is strong and mounting evidence that the recovery act is putting people back to work,” a statement Vice President Joseph R. Biden Jr. made at a recent news conference in Washington.
In a recent post, Not that I told you so, I lamented the woeful results of the stimulus, and the lack of job creation results. Of course, today produced another painful reminder of this truth … that unemployment reached 10.2%, exceeding 10% for the first time since 1983!
In Where’s the Stimulus, I reported that while corporate profits were boosting the market, revenues for those same companies have fallen far more than the amount of the stimulus. While profits help fuel job growth and give companies some headroom to make those decisions, the lack of revenue growth eviscerates any need to rebuild your talent pool.
There is more evidence that the pols in Washington have no clue about how to stimulate job creation, (more…)
Say no to conventional wisdom
There's no better time to re-examine our assumptions about what works and what doesn't. How many times have we seen the power of unconventional thinking (quit using the tired "out…