Is EBIT the Right Performance Measure for a Private Czech Company?

摘要

The text delivers in-depth elaboration of various approaches to profit composition and its use and interpretation in financial analysis and business valuation. By focusing on the mutually incompatible needs of various stakeholders we try to prove that a comparison of performance indicators based on financial statements derived from the framework of US GAAP, IFRS or Czech national regulation is misleading. By giving an example of the category of profit called EBIT, which is a widely used performance criterion in mainstream Anglo-Saxon text books on corporate finance, financial analysis or business valuation, we explain, that whereas the "real EBIT" is based on the cost structure defined by destination, the "Czech EBIT" is derived from an income statement based on cost structure defined by nature. These two are not compatible in terms of their interpretation. In the end we summarize the main issues users and authors of financial analysis have to face when trying to apply "Czech EBIT" in various mainstream models of financial analysis and business valuation.