Originally Posted by
Phone Wind
I’m just a poor old retired dinosaur, but my other half is involved in investigating fraudulent bean counters and when I mentioned this to her, she told me that a lot of failing businesses focus on highlighting EBITDA because it minimizes the impact of factors outside of their scope of control and focuses only on what can be controlled.
That's true and compounded with the fixation on ROCE. I remember being at Houston Towers budget planning sessions back in about 2004. It came in with BC and whoever his CFO was at the time (can't remember). I generally got on well with BC and had a lot of time for him but that was one that caused me some pain. The easiest way to get a high ROCE is to keep the CE down by leasing (then not recognised on Balance Sheets) or flogging on old 332L's & S61's rather than investing in new tech.
Ironically, by the time the rates supported the new tech that new strategy backfired by keeping more expensive assets on the B/S than our major competitor who took advantage at the downturn and EC225 groundings through Ch11 lease walk-aways.