Old 09-30-2009, 04:23 AM
  #10  
geosynchronous
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Joined APC: Aug 2007
Position: Corporate Captain
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Originally Posted by BeenThereDoneIt View Post
GEO.......I'm not trying to **** in your Wheaties. I'm trying to help you understand something that most people do not. EBITDA is a common bookkeeping scheme that many comapnies use to show earnings that may or may not be real. It is legal for companies to "change" the criteria of this formula every single reporting period. UNless you are extremely good at interpreting this data and you have access to all the past data....then you have no idea if a company is turning a profit using this accounting practice. I got this next bit of info for you to read, from a source better than me. See what you think:

If the EBITDA figure seems to have a good growth rate, then some investors may use this figure instead of the overall net figure. It can show them that the company has a future for potential growth and that they will get a return on their investment. Investors call this looking at the EBITDA margin rather than the net margin.



There are potential problems in using the EDITDA figure. The EBITDA leaves out of lot of expenses in the final figure, so it may not be a realistic view of a company’s profitability. It also does not measure the actual cash that is flowing into the company because of the figures that it leaves out.

There are a few factors that the EBITDA neglects. These include the money required for working capital, fixed expenses and other debt payments and capital expenditures. In every business, capital expenditures are a crucial, ongoing expense. However, this is not factored into the EBITDA figure, so investors need to be wary when using the EBITDA figure as a basis for a profit margin.

So, GEO......did they turn a profit? I certainly hope so, but we won't know until Waco gets his "profit-sharing" check. LIke I said, I hope those guys keep us posted. Good luck to everyone!
To be fair, no cash flow or income statement was published here, just a news summary. I understand how EBITDA can be spun to show profits with companies that may have high debt (or fast depreciating assets like bizjets). To be honest, I have no desire to dig in to Avanair's financials either.

However, EBITDA still shows a good example of operating profit. When revenues and EBITDA are compared year over year and they are positive as shown in the press release, it shows financial health. Investors are diligent by being skeptical of EBITDA.

I'm not a CPA, and I didn't stay at a Holiday Inn last night, but increased revenues, increased earnings, and a positive operating income shows "health." Whether it is sustainable, that is up to them...and I hope Geronimo and everyone else at Avantair reaps the rewards of their efforts.

Thanks for pasting the information from Wisegeek. More information can be found at

http://www.investopedia.com/articles/06/ebitda.asp


Take care...

Last edited by geosynchronous; 09-30-2009 at 04:46 AM. Reason: spelling
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