[bvw]

"investors must now look further up the line in financial statements, to simple but poorly understood measures like operating cash flow or free cash flow"

It's simpler than that, look for, demand, that golden oldie known as yield.

[KarlInOhio]

This charade went on for five quarters, apparently undetected by WorldCom's hapless accountant, Arthur Andersen.

Hapless? I haven't heard that term used for Arthur Andersen. They have always been very efficient at doing what they do. Unfortunately for the country, giving an honest accounting of the books has not been high on their list of things to do.

[habs4ever]

Gee, and this ace thinks people don't look further at the components of EBITDA and examine their veracity? they just take the figures as is? Sure thing. But don't let facts get in the way of a broadbrush hit piece by a writer with a score to settle.IF people took the numbers at face value, then THEY are to blame, not EBITDA.

But, all the genius would have had to do was look at the stock price action for the past yr to know that a liquidity crisis was apparent.

It would help to hear from creditors and banks as to what was being said to them by WCOM 6 quarters ago as the accounting fudging took place.It appears to have to be to stave off having credit lines cut.

[Huck]

Prodded by talking heads on CNBC,

Someone should investigate CNBC.

[Timesink]

Ha ha ha ha ha! I posted the same thing on another thread a couple of nights ago, and said "The SEC ought to ban publicly-traded companies from releasing EBITDA results." I got all sorts of flak about that telling me I was wrong and EBITDA is quite useful and meaningful; one guy snottily said, "It's obvious you're not a financial professional," blah blah Barbra Streisand blah. All the while I was watching dozens of people on CNBC say "EBITDA can literally be made up out of thin air," "it's meaningless crap," etc. And now this.

So please excuse me if I say to those Freepers: Nyah nyah!

There, I feel better. *grin*

[DoughtyOne]

the Case of the Freeper FRiva Feva is under scrutiny - super-sleuths are welcomed
come resolve the way to yesterday's Target Post, you're not out of the running yet
win your registration fees to the FRive Las Vegas Conference if you dare

[silver fox two]

How sweet it is!! It took a while, but it finally looks like 'what goes around, comes around' for MCI. Maybe they'll think twice before breaking up a good monopoly the next time. I can hear thousands of former Bell Telephone employees laughing all across the country.

[traditionalist]

This guy does not understand why EBITDA is a meaningful number. That it is harder (not impossible!) to manipulate than net income is only a small part of it.

[gcruse]

"The SEC ought to ban publicly-traded companies from releasing EBITDA results."

Here is something for you from my old memory vault.

Back in the early-90s, before AOL became the behemoth
capable of swallowing Time Warner, the ISP was routinely
charging advertising expenses to capitalization.  There was
a brief squawk that this was ridiculous, that it was just
a way to make the company look viable, when it was
losing money like crazy.  The folks running AOL kept
doing it, I guess, until they didn't need to anymore as
the customer base finally got big enough to make
the profitable.  Charging advertising to a capitial
account looks very similar to what WorldCom did.
Yet there AOL-Time Warner sits, with that pretty
feather sticking out of her whiskered chops.

[ItisaReligionofPeace]

"That $1 billion becomes an asset whose value is written down, or amortized, over time, and is charged against earnings, even though it doesn't represent cash going out the door.)"

This is not true as of a year or two ago. Goodwill is only written down now if it is impaired...

[Straight Vermonter]

Earnings Before I Trick Dumb Auditors

I remember the people that used to audit the company where I was a manager. Dumb auditor is redundant.