Does AOLs Use of EBITDA Make Microsofts Income Statement Look Respectable?
You certainly don’t see Microsoft using EBITDA the way AOL does. AOL claims that goodwill is a non-cash charge and therefore should be added back to earnings. What they do not state is that goodwill is not a valid tax deduction. What this means is that AOL’s taxable income will be much higher than net income and furthur exacerbate their cash flow difficulties as taxes, which must be paid in cash, become due. It is most unusual that AOL’s management so grossly distorts their financial reporting but again they are effectively emulating Microsoft. One might ask, isn’t cash paid to a bank for interest a “cash expense” and one that should therefore be deducted rather than excluded from reported earnings? AOL Allows the Icon of Predatory Lending, Citigroup, to Fleece Its Customer Base and Extract the Most Profitable Part of Their Customer Relationship It does appear that Citigroup could indeed be the most significant advertiser on AOL, having recently signed a new exclusive deal. It is surpr
