Warren Buffett: EBITDA, a cash expense

“I get these people that…want to send me books with EBITDA in it, and I just tell them, you know, ‘I’ll look at that figure when you tell me you’ll make all the capital expenditures.’ If I’m going to make the capital expenditures, there’s very few businesses where I think I can spend a whole lot less than depreciation year after year and maintain the economic strength of the business. So I think the EBITDA has been a term that has cost a lot of investors a lot of money…. It’s not a non-cash expense. It’s a cash expense. You just spend it first. I mean the cash is gone, and it’s a delayed recording of cash. How anybody can turn that into something they use as a metric that talks about earnings is beyond me. ”

—Warren Buffett.