In Professor Chris Higson’s webinar he explored what he calls the cult of EBITDA which is now very widely used as a performance measure by companies and investors.
Professor Chris Higson explained why EBITDA is a number that needs handling with great care – it is not a proper measure of profit, nor of cash flow. It can make unprofitable businesses look profitable and, moreover, is very vulnerable to creative accounting. It completely ignores the balance sheet and the cost of the assets you need to run the business – as Warren Buffett put it: Does management think the tooth fairy pays for capital expenditures?
In his webinar, Professor Chris Higson also considered the question of whether analysts have experienced a loss of focus on the rigorous measurement of income and of return on capital and he considers the overall impact on corporate valuations in today’s environment.”
Ann White, Programme Director
Chris Higson, Associate Professor of Accounting Practice
Accounting and Financial Analysis
Next start: 01 Aug 2016
Accounting and Financial Analysis brings the economic world to life through rigorous fundamental deconstruction of financial statements. The course will give you a passion for reading balance sheets and put you a step ahead of your peers.