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💰 Google’s First-Ever Dividend

💰 Google’s First-Ever Dividend

What are the drawbacks to EBITDA?

April 26, 2024

⏱ Reading Time: 2 Minutes 19 Seconds

Happy Friday, future bankers!

Hope everyone is doing well! Today we’re covering the drawbacks to EBITDA, your career goals, and Google’s first-ever dividend.

🚀 Let’s get into it.

🔢 Technical Question

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What are some of the drawbacks to EBITDA-based financial metrics?

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a widely used financial metric, but it has its share of drawbacks. Let’s explore some of them:

Ignoring Key Expenses:
- EBITDA excludes critical costs such as interest, taxes, and depreciation. By doing so, it can provide an incomplete picture of a company’s financial health.
- For instance, ignoring interest expenses can be misleading, especially for companies with significant debt obligations.
Masking Financial Weaknesses:
- EBITDA can inadvertently mask poor financial decisions or operational shortcomings.
- Companies might manipulate EBITDA to make their performance appear better than it actually is. This can mislead investors and stakeholders.
Inadequate Profitability Assessment:
- EBITDA doesn’t reflect a company’s true profitability. It lacks the nuance of net income, which considers all costs.
- Relying solely on EBITDA may lead to incorrect conclusions about a company’s overall financial performance.
Exclusion of Changes in Working Capital:
- EBITDA doesn’t account for fluctuations in working capital (e.g., accounts receivable, inventory, accounts payable).
- Changes in working capital significantly impact a company’s cash flow, and EBITDA overlooks this crucial aspect.
Deceptive Valuation:
- When calculating business valuation, EBITDA can be deceptive. It overstates profitability by excluding certain expenses.
- Investors should consider other metrics alongside EBITDA to arrive at a more accurate valuation.

🗣 Behavioral Question

Tell me about some of your career goals.

It’s essential to provide a thoughtful and well-prepared response. Here are some best practices to consider:

Be Honest and Authentic:
- Honesty is crucial. Be genuine about your aspirations and avoid exaggerating or providing generic answers.
- Authenticity helps interviewers connect with you. Share goals that align with your true interests and values.
Short-Term and Long-Term Goals:
- Short-Term: Discuss a goal related to the specific role you’re interviewing for. Show how you plan to contribute immediately.
- Long-Term: Highlight broader career aspirations. Mention how you see yourself growing within the industry or the organization.
Research the Company:
- Understand the company’s mission, values, and objectives. Tailor your response to demonstrate alignment with their goals.
Show Ambition and Growth:
- Express your desire to advance and take on more responsibilities.
- Avoid sounding complacent or stagnant. Instead, emphasize your eagerness to learn and contribute.
Be Realistic:
- Set goals that are achievable based on your current skills and knowledge.
- Avoid overly ambitious or unrealistic objectives. Balance ambition with practicality.

🗞 Industry News

It’s one those moment when you look at something and get the impression that something’s wrong. Like you look at the sky and see your web browser on the screen of your computer ;)

💰 Google’s First-Ever Dividend

Alphabet, the parent company of Google, made waves with its impressive first-quarter results. Shares skyrocketed by 10% on Friday morning, fueled by better-than-expected performance. Here’s the scoop:

Financial Triumphs: Alphabet reported a whopping $80.54 billion in revenue, marking a 15% increase from the previous year. This growth rate was the fastest since early 2022, leaving analysts in awe. Earnings per share came in at $1.89, comfortably surpassing Wall Street’s expectations of $1.51.
Generosity and Confidence: The company’s board didn’t stop there. They authorized a 20-cent-per-share dividend, set to be paid on June 17. It’s Alphabet’s first-ever dividend. But wait, there’s more: they also gave the green light for a $70 billion stock buyback. Talk about confidence in their own future!