EBITDA – A Misleading Earnings Measure

This article was originally published on CoreEarnings.com .   What is EBITDA? EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) is a commonly used earnings metric in financial analysis. The central motivation for using EBITDA is that shows a firm’s earnings from its core business activities and it is more of a cash based metric. The … Continue reading EBITDA – A Misleading Earnings Measure

Groupon – A Tech Company With Zero Research and Development

This article was originally published on CoreEarnings.com .   In its offering prospectus Groupon billed itself as a ‘local e-commerce’ company which brings ‘the brick and mortar world of local commerce onto the internet’ which clearly defines it as an online tech business. It is therefore nothing less than astonishing to see no Research & Development expense on … Continue reading Groupon – A Tech Company With Zero Research and Development

Using Cash Flow In Financial Analysis

This article was originally published on CoreEarnings.com    Financial Reporting is primarily focused on providing a detailed view of a firm’s earnings. The accruals concept is applied to both revenues and expenses so that only income/expenses which are earned or occurred in the period are reflected in the accounts irrespective of payments. For example, a … Continue reading Using Cash Flow In Financial Analysis

Correlation – The Need For ‘Stationary’ Data

How correlated are Intel and Google’s stock  prices? The below graph shows the daily close of prices of both from mid 2009 to mid 2011. From first impressions, it certainly looks like the two price series move in tandem and should have a high correlation. Indeed it turns out that correlation coefficient of the two … Continue reading Correlation – The Need For ‘Stationary’ Data