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?

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How did Exela Technologies present its financial situation to investors?

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

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

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

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