I won't close down a business of subnormal profitability merely to add a fraction of a point to our corporate returns. I also feel it inappropriate f… - Warren Buffett

Naming the plane has not been easy. I initially suggested ‘The Charles T. Munger.’ Charlie countered with ‘The Aberration.’ We finally settled on ‘The Indefensible.

Trumpeting EBITDA (earnings before interest, taxes, depreciation and amortization) is a particularly pernicious practice. Doing so implies that depreciation is not truly an expense, given that it is a “non-cash” charge.

Imagine, if you will, that at the beginning of this year a company paid all of its employees for the next ten years of their service (in the way they would lay out cash for a fixed asset to be useful for ten years). In the following nine years, compensation would be a “non-cash” expense — a reduction of a prepaid compensation asset established this year. Would anyone care to argue that the recording of the expense in years two through ten would be simply a bookkeeping formality?

Very, very few s are managed from a value standpoint.