EBITDA lower than Net Income? How?
In a recent interview at Lazard, I was asked can be EBITDA be lower than net income? If so how?
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Depends on tax assets and interest income.
Wonder if this was a FIG question… since banks are valued in earnings and not EBITDA
Interest Income is reducted for EBITDA - so maybe a significant boost of income from interest
Some lawsuit that brought in a bunch of money and is deducted from EBITDA
Some sort of non-recurring gain/income that is deducted from EBITDA
There is a question similar to this on the 400Q guide.
lawsuit / non-recurring points only accurate if EBITDA is adjusted for one-offs but net income isn't, which probably isn't true
Very true.
EBITDA isn't a GAAP number, and is typically adjusted for one-offs, otherwise it's useless. Not saying some management teams might not adjust everything detrimental out, but if it's a material, clearly one-time item, it would be surprising not to see that removed.
Yea agreed I'm saying both EBITDA and Net Income in this context are probably adjusted
Could be very positive net income or a very big other income line e.g. if they have massive equity-accounted investments whose income is accounted for below EBIT
Seeing this in reality – would be maybe someone who is a holding company like IAC. Go through waves where they deploy capital and then waves where they sell their assets and are left with a ton of cash temporarily but not many operating assets. And in the latter phase, before they distribute the cash or reinvest it, they would have a ton of interest income but pretty much no EBITDA
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