Are You "Buying" Sales? --Dickeson

You may find some figure labeled "EBITDA," which means Earnings Before Income Taxes, Depreciation and Amortization. Is that cash in or cash out? Neither. It would come closer to meaning something if it was EBDA—Earnings Before Depreciation and Amortization.

Depreciation and Amortization aren't cash charges at all. You must deduct lease rents and taxes paid or refunded to know where you stand on cash. It would also have a lot more meaning if "Earnings" meant "Cash Collected" in place of receivables accumulated. That's what the editor meant when he/she said cash is more difficult to fake and is the ultimate test of prosperity.