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Pastimes : CNBC -- critique. -- Ignore unavailable to you. Want to Upgrade?

To: S. maltophilia who wrote (11001)	6/29/2002 10:28:58 AM
From: Elmer	Read Replies (1) \| Respond to of 17683

One last point and I'll let it rest. You can run an EBITDA multiple for valuation purposes on any company including MSFT, GE or WMT. It is just a tool that is most frequently used for the leveraged company but is very applicable to all companies. The reason CNBC is missing the point in its reporting is that they are confusing EBITDA with leverage. One is an accounting measure that can be calculated for both leveraged and unleveraged companies. The other is a measure of risk (namely, the debt in your capitalization) that equity investors face. You said if "the company isn't making any money... I'll avoid it as an investment." That's perfectly acceptable for you. But the existence of these highly leveraged companies doesn't mean they aren't good investments or that they are run by crooks. CNBC would have you believe otherwise which constitutes irresponsible reporting.