EBITDA

[torontosimpleguy]

Randall Wrote:
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> torontosimpleton was getting at, though I have
> trouble understanding him from time to time...

You know when I came to this forum it was full of financial snobs showing their importance to novices. Besides my passion to finance I like to irritate snobs and tease them here

 

[Randall]

"You know when I came to this forum it was full of financial snobs showing their importance to novices. Besides my passion to finance I like to irritate snobs and tease them here "

Teasing and name calling have no place on a professional forum, thank you very much

 

[torontosimpleguy]

Big Nodge Wrote:
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> toronto, you are still not communicating your
> point in language others can understand. Due to
> FAS 123, EBITDA will already reflect the
> accounting charge associated with options
> compensation. The question is, should we add it
> back, i.e. ignore it. Subtracting it will never
> make since, as it was already included in
> operating expenses and is reflected in operating
> income (EBIT). The question here is, should we add
> it back, along with depreciation and amortization,
> as it�s a non-cash charge.

In your definition (i.e. we already subtracted from EBITDA all expenses and start from there) � operating expenses to maintain business operations are not added back while non-operating expenses are added back.

> I guess the question comes down to what you are
> using it for. To make apples-to-apples comparisons
> of operating profits between companies, it
> probably makes sense to not add it back. But as a
> cash flow proxy it might make sense to add it back
> along with other non-cash charges. I don�t really
> like EBITDA as a cash flow proxy anyway, however.

To compare business operations of the companies you add operating expenses back. To compare financial situation of the companies as total enterprise you add all of them back.

> Another strike against the apples-to-apples
> argument is FAS 123 still allows management
> discretion on intrinsic value versus fair value
> accounting. I had forgotten that when I made my
> first post.

Here I have to think.

 

[torontosimpleguy]

Randall Wrote:
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> Teasing and name calling have no place on a
> professional forum, thank you very much

It was not about you, it was about name you called me in your post.

 

[numi]

torontosimpleguy wrote:
"You know when I came to this forum it was full of financial snobs showing their importance to novices. Besides my passion to finance I like to irritate snobs and tease them here "

...your passion "to" finance? And what does irritating and teasing accomplish for you or anyone else here? Maybe I am missing something -- please discuss...

 

[Randall]

torontosimpleguy Wrote:
-------------------------------------------------------
> Randall Wrote:
> --------------------------------------------------
> -----
> > Teasing and name calling have no place on a
> > professional forum, thank you very much
>
> It was not about you, it was about name you called
> me in your post.

I'm aghast at these claims and accusations.....to this I say good day sir

 

[Big Nodge]

I'm not trying to be a jerk here, because it seems like English is probably not your first language, but I think you're having trouble understanding other people's posts and articulating your own ideas. I feel like we're in agreement on this issue, but honestly I can't figure out what you're trying to say most of the time, and you seem to totally miss the point of what other people post (or ignore them).

The fact that you've revealed that you engage in these debates due to personal vendettas against pompous posters also makes me less interested in continuing the discussion.

I am curious if practitioners are adding options expenses back when building DCF models. I remember reading somewhere that many analysts were ignoring options expenses from their metrics completely.

 

[torontosimpleguy]

Big Nodge Wrote:
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> The fact that you've revealed that you engage in
> these debates due to personal vendettas against
> pompous posters also makes me less interested in
> continuing the discussion.

I didn�t say that. I said at the beginning I tried to look at the problem from theoretical point of view to apply the stuff I�ve learned in Level II curriculum.

I didn�t say that I write posts to tease. I choose my username to do so. And I ask questions to get into the roots of problems that irritate people who present themselves as experts but don�t understand fundamentals.

> I am curious if practitioners are adding options
> expenses back when building DCF models. I remember
> reading somewhere that many analysts were ignoring
> options expenses from their metrics completely.

I would like to know it also if they put some theory behind their approach.