View of Disneyland profits minus flimflam still a picture of loss

Record revenues of HK$3 billion helped Disneyland report positive earnings before deducting interest, taxes, depreciation and amortisation (ebitda) for the first time: it reversed from a loss of HK$70 million last year to earnings of HK$221 million. SCMP, January 19

I have not yet visited our Disney park. My wife and I always meant to go but the kids are grown now and we just haven't got around to it. We haven't even gone to Ocean Park in recent years, at least not since Allan Zeman gave it the Lan Kwai Fong treatment.

Now don't get off the topic, Jake. The topic is this thing called ebitda and why it's flimflammery for anyone associated with Disney to cite this as a measure of profitability.

It's flimflam because ebitda is something you look at seriously only if you are thinking of buying a bankrupt asset and can do so on an operating basis without paying anything for it, without having to meet any further obligations to staff and without picking up its outstanding debt.

The only other reason to cite ebitda is if you are a securities analyst who wants to confuse clients with jargon to hide ignorance. It is very often used for this purpose.

Think about it. Under normal circumstances can you ignore interest payments on borrowings for your business when calculating your returns from it? What will your bank do if you stop these payments?