New Non-SAAP Measure: EBE

by Johnny Debacle

Many companies provide an EBITDA figure along with their earnings, and they let you know it’s a non-GAAP measure, because, well, it’s a non-GAAP measure. Like Skittles, EBITDA comes in a rainbow of fruity flavors: adjusted EBITDA, EBITDAR, EBITDAM, EBITA, EBITDARP, EBITDARM, EBITDARPO, EBITDO and when times get really bad REBITDA.

We think there is an ample opportunity for the introduction of a new non-SAAP measure, one we call EBE or Earnings Before Everything. Let’s cut to the chase, let’s not dicker around, people use EBITDA as a proxy for free cash flow but management wants to use it as a way to inflate the appearance of a company’s health and what better way to do that than EBE? Add-back whatever you want, add it all back, even stuff the firm has nothing to do with. How much did the Chunnel cost? $100 billion? Add that back. Katrina cost a lot too. Add that back. That earthquake in Pakistan or Mexico or wherever? Add that back. Did you donate to charity? Add it back. Did you write something down? Add it back. Did you write something up? Use your discretion to not back that out.

Recommendation: Whenever I see EBITDAM, I say it in my mind like someone who is really surprised at EBIT. Like “EBIT, DAMN, those results are amazing!” or “EBIT-DAM! Cash flow is king!”

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  1. 1-2
    April 24th, 2008 | 1:40 pm

    HAHA. I’m not going to lie, I had never heard of EBITDAM before, but I’m pretty sure it actually is equivilant to EBE. I’ve always been amazed at what companies back out as non-recurring items…magically they recur every earnings period.

    EBITDAM: Earnings Before Interest, Tax, Depreciation, Amortization and Marketing

  2. Juan
    April 24th, 2008 | 1:49 pm

    EBE is all well and good, but feels a bit 1H:07, the neo-new wave is Chrysler’s shutdown in July: EBN – Earnings Before Nothing.

  3. JasonL
    April 24th, 2008 | 2:23 pm

    I wonder how it feels to be the guy choosing Big Purchases for Cerberus these days.

    Step 1: Buy GMAC because lending is where the real money is.

    Step 2: Buy Chrysler because, uh, not sure. Damn, this is some good crack.

    Step 3: Provide quality negative value to your shareholders.

  4. Cory
    April 24th, 2008 | 4:09 pm



  5. KOPI
    April 24th, 2008 | 4:18 pm

    Well spoken. ‘Course EBITABE is a good measure too – (bribery & embezzlement)

    Short GAAP, long mark-to-myth

  6. April 25th, 2008 | 9:00 am

    sounds like spinal tap GAAP. A policy similar to EBE: crank it up as a level 4 asset class when calculating value.

  7. April 25th, 2008 | 10:10 am

    I have seen EBITDAM mean 3 different things, one was marketing, one was “mortgage related expense” and the third I can’t recall.

  8. s75
    April 28th, 2008 | 8:01 am

    before g&a expense, which doesn’t even start with ‘M’ but does at least contain an ‘M’ in one of the words

  9. Peter
    April 28th, 2008 | 11:13 am


    which sounds much more belivable when it is said phonetically then when it is dividing your EV.