EBITDA zero

Well, sorry guys, tomorrow we’ll have the finance exam and I can’t really think in something else… (Apart from the UNIQUE) :-)

Reviewing the financial rates chapter, I got to the acronym EBITDA. I remember that one from my times working for 3 (Hutchison3G) in the UK. We had that objective one year. The management told us we had to help the company to achieve EBITDA zero in order to get 100% of our bonus. Yes, EBITDA zero, and I have to reckon I didn’t know what in the hell was that! EBITDA=0 Umm, Give me a break! I was doing technology stuff.

It looks as my big investment in this expensive MBA is starting to pay back or if you want, I am happy with too little…

EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization. As Hutchison 3G was a new company investing in a new emerging business (3G). That year the objective was not to have operative looses! No reason to talk about some benefits then.

UK and USA accountancy methods are quite different to the Spanish or European accountancy systems. In the UK/USA they are use to the terms Cash-Flow and EBITDA to value a company as a good one in financial terms. Amortizations in Spain used to make look better balances and company results because Amortization in reality doesn’t mean more or less cash in your bank.

Thanks and smile,
Dk
P.d that picture is just for the fun of it, it was taken in front of Wall Street last Christmas.