“Never, ever, think about something else when you should be thinking about the power of incentives. Show me the incentive, and I will show you the outcome” Incentives are not a guarantee of anything. A company with a terrible incentive system can have an incredible performance. In the same way, a good incentive system does not ensure success. Incentives are just one more leg in the study of a company and its management. But it is a fundamental one.
No number should be taken at face value. With that said, I actually quite like adjusted EBITDA and the like! I like looking at how companies report non-GAAP numbers in an effort to understand how they think about business. Not always malicious. Of course, it's imperative to make your own adjustments and compare to GAAP, non-GAAP, etc. It's one of the best ways to contextually understand all of the levers of value creation and identify what the company is most sensitive to.
Loved this piece.
No number should be taken at face value. With that said, I actually quite like adjusted EBITDA and the like! I like looking at how companies report non-GAAP numbers in an effort to understand how they think about business. Not always malicious. Of course, it's imperative to make your own adjustments and compare to GAAP, non-GAAP, etc. It's one of the best ways to contextually understand all of the levers of value creation and identify what the company is most sensitive to.