«EBITDA Positive» A Misleading Metric?
Most startups in India nowadays present their financials using the word ‘EBITDA’, but this doesn’t give a full picture to their numbers.
The Earnings Before Interest, Taxes, Depreciation and Amortization (or EBITDA) is a measure of the operating profitability of a company.
Basically, does a company sell it’s products at a higher cost than it makes them for?
But there are other costs like Interest on debt, Asset depreciation, taxes, ESPOs extra, which aren’t considered here.
A healthy metric to judge a company should be NET Profit and Profit after taxes (PAT)
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