What the Quality of Earnings Does Not Show
A quality of earnings report tests whether earnings are real. This paper examines five operating gaps it leaves open in equipment and field service deals, and how to test them before close.
Publication
Insights
Analysis on operations, service economics, and commercial execution in industrial, equipment, and field service businesses.
Written for private equity firms and portfolio company leaders.
The Hidden Costs of Managing Exclusively to EBITDA
EBITDA is a useful measure of operating earnings and a poor management objective, especially in asset-heavy service businesses.
In this article
- Why the pressure is rising
- What EBITDA leaves out
- The addback problem
- Longer holds change who pays
- What to measure alongside EBITDA
When Collections Problems Are Really Operations Problems
In service businesses, many past-due receivables start in the field, long before an invoice reaches the customer.
Recurring Revenue Does Not Guarantee Recurring Profit
Contracted service revenue earns its premium only when each contract covers its true cost to serve.