Yesterday I gave you a conversation between a Mexican fisherman and an investment banker as well as how My Drunk Aunt got the words “jacuzzi” and “yakuza” confused.

Speaking of getting herself into trouble with the Japanese mafia…

Trish needed a new pair of running shoes and here’s how it went:

Shoe Saleman: *measures her foot* Looks like you’re size 6.

Trish the Dish: OK, can you grab me size 6 in the purple Nikes please?

Shoe Salesman: *takes shoes out* Here you go… put these on.

Trish the DIsh: They’re too tight.

Shoe Salesman: Try it with the tongue out.

Trish the DIsh: It’th nho ghood it’th thtill thoo thight.

Shoe Salesman:

Two Ladies Sitting Beside Her:

In other news from my BCS podcast…

It’s not a fear of public speaking / cold calling / posting on social media… it’s a fear of being judged.

Anyhoo…

Your one PROFIT ACCELERATION THING today is: 

‘EBITDA’

I run a 4-day training on how to read financial statements…

… accounting can be intimidating, but it’s really not that difficult once you understand the fundamentals.

The late great Charlie Munger said, every time you hear EBITDA, just substitute it with bulls–t.

So, what is EBITDA?

It’s an alternative way to measure profitability and stands for:

Earnings

Before

Interest

Taxes

Depreciation

Amortization

To determine a company’s EBITDA, you simply take their net income (earnings / profits) and add back Amortization, Depreciation, Taxes and Interest.

Why EBITDA?

Companies that know what they’re doing:

1. Use leverage (debt) to grow.

2. Use interest and depreciation (superpower of a good accountant) to lower your tax position.

These two lower the business’ net income, which is bad for the company’s valuation / optics.

Smart business owners convinced investors and the market to concentrate on CASHFLOW rather than net income / earnings.

*Minimize their tax position and get a high valuation

Enter: EBITDA which is a simple and quick way to evaluate a company’s cashflow.

My personal opinion?

I don’t agree its total bullsh*t but I do agree you need more information (Example: CapEx and adjustments in working capital) to make an informed decision.

Accounting mumbo jumbo can be confusing, but it’s really not that difficult.

Tell the others.

Now, pick up the phone and go help someone.

Obsessed with your business coaching success,

Karl Bryan

Founder, Focused.com

PS. Winner’s win… losers lose.

PPS. Marriages break up from a lack of money over a lack of love X 100

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