Over the last few years, it’s become clear that many technology investors don’t know how to value companies that have negative net income. For example, what’s the best way to look at an emerging telecom company that’s building out its network and accruing lots of debt? Net income, when calculated according to U.S. Generally Accepted Accounting Principles, can be distorted and tell an investor little about the operations. As substitute, EBITDA is a metric that’s often presented as a surrogate for cash flow from operations.
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