Deals
One of Wall Street's Favorite Metrics Is Now Getting Mocked
- Borrowers stretch limits of acceptable adjustments to Ebitda
- Some debt offerings find ways to double earnings projections
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In an anything-goes world for debt, there’s a new definition for Ebitda: Eventually Busted, Interesting Theory, Deeply Aspirational.
That’s the tongue-in-cheek assessment of a Moody’s analyst who’s been tracking earnings projections used by companies lately when asking investors for loans. Ebitda really means earnings before interest, taxes, depreciation and amortization, but borrowers have been stretching the limits of what’s acceptable when they tweak their accounting to boost the figure.