Day 944: EBITDA. Taxes. Interest.

Yesterday I was explaining seven principles to achieve spiritual, mental, physical freedom as well as the Christmas card my lawyer sent me.

Speaking of happy twelve (12) months from the date hereof…

We were babysitting my nephew Dick. A curious little kid, here are some of his questions:

– Why do all flavors of fruit loops taste exactly the same?

– Why are eggs packaged in a flimsy carton and batteries are secured in plastic that’s almost impossible to open?

– Why is “abbreviated” such a long word?

– Why is there a D in ‘fridge’ but not in refrigerator…?

– Why is lemon juice made with artificial flavor yet dish-washing liquid is made with real lemons…?

And his BONUS QUESTION just before tucking him in for bedtime…

… Uncle Karl, why do they sterilize the needle for lethal injections?

*let me go grab you a teddy bear, Dick*

In other news…

Professional athletes take months off in between seasons for a reason.

Your One PROFIT ACCELERATION THING Today Is:

‘EBITDA’

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

So, what is it?

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) 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 (Super Power of a good accountant) to lower their tax position.

Those two lower the businesses 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 it’s 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 / intimidating but it’s really not that difficult to understand.

*That’s why we run a 4 day course for business coaches on how to read financial statements.

You heard it here first.

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. If this helps and you want it to really sink in… GO TEACH IT to someone cause that’s the best way for you to learn it. A friend, your spouse, a prospect, a client etc…

*Don’t plagiarize my work like a lame arse.

PPPS. Marriages break up from lack of money… over lack of love X 100. Business failures lead to destruction, addiction, depression, anxiety, suicides, and unfortunately, far more.

As good business coaches, we save marriages, save families, save kids from self-destruction… we save lives!

A true life of purpose.

PPPPS. If you’re looking for a proven system to follow for your coaching…. I created Profit Acceleration Software™ as well as our Digital Acceleration Software™ and high-end step-by-step training to support it…

It’ll teach you ‘How to find any small business owner $100,000 in 45 minutes without them spending an extra dollar on marketing or advertising.’

Imagine finding your annual $12,000 to $50,000 coaching fees BEFORE you started coaching your new clients?!  And a proven coaching system created for you to follow with your new coaching client.

PPPPPS. Forward this to someone that needs to subscribe to my daily emails and get a limited-time, complimentary subscription to my business coaching magazine go here:

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PPPPPPS. They tell me my Podcast is Ric Flair style, Money Makin, Client Getten, Joint Venture Landing, Event Fillin, High-End Coaching Client Findin Gold For Business Coaches.

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