Manage episode 289473521 series 2864315
Profit, Net Operating Income, EBIT, EBITDA, SDE, Adjusted or Recast Earnings, and Free Cash Flow (which is the most important) - what do they all mean?
I dissect all of these terms and what they mean to business buyers, sellers, lenders, and valuation people.
A few things covered:
- Using EBITDA to calculate return on investment on an asset heavy business is foolhardy.
- Owner compensation is not discretionary, just like your mortgage, utility bills, etc. are discretionary.
- Free cash flow is what it's all about.
And, this is covered in all my books including Chapter 45 in Getting the Deal Done!