Fuzzy Ebitda Math That Fueled Junk Debt Boom Is Sparking Jitters

The video discusses EBITDA, a financial metric popularized in the 1980s, used to assess a company's cash-generating ability. However, it doesn't account for capital investments and debt, leading to potential manipulation. Examples include Exela Technologies and WeWork, which used adjusted EBITDA to present a more favorable financial picture. Critics argue that such practices obscure the true financial health of companies, affecting the junk bond market and creating a false sense of security.

What is EBITDA and why did it become popular in the 80s?

How did Exela Technologies present its financial situation to investors?

Explain the impact of Community Adjusted EBITDA as used by Rework.

What concerns do critics have regarding the adjustments made to EBITDA?

What is the potential effect of the adjustments on the junk bond market?