Assessing Profitability

Abstract

There are definite recognized advantages to having widespread acceptance of a single measure with which to benchmark the performance of a business. Recently, EBITDA has received a lot of attention and focus for this purpose. John Calabrese and Brigid Rafferty, Principals with TRG, examine how a cash crisis can result due to misunderstandings surrounding the measurement of EBITDA. There is no substitution for a thorough analysis and understanding of the transactions recorded in a company's financial statements and projections.