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"Hybrid" EBITDA & Depreciation/amortization discrepancies

Hi Thomas,

(Sorry for lots of posts today - I have more time on weekends!)

Again this is another thing that may affect your new PDF extractor, so wanted to bring to your attention early as you are working on it:

The Depreciation & Amortization values for many companies are actually different on their P&L and on their Cash Flow statements. If you look for example at EDGAR filings for Exelon/Delmarva (Ticker: EXC), there are significant differences. This is true for quite a few companies, not just this one.

I dug into this and the reason seems to be that: some companies include Depreciation/Amortization as part of their COGS in the P&L, and also some companies include it in their R&D expenses, if applicable. Some companies don't. For the companies that do, the Deprec/Amort on CF can be significantly higher than the reported Deprec/Amort on P&L, since the reported Deprec/Amort on P&L will only be the amount that is not attributed to COGS, R&D, or other categories.

EBITDA on SimFin currently is kind of "hybrid": it uses EBIT from P&L and then adds back the Deprec/Amort from CF; problem is this "hybrid" value can double-count some amount of Deprec/Amort since these numbers are different from the 2 sources.

I think you might consider having 2 numbers, like DepreciationAmortizationCF, and then DepreciationAmortizationPL, as 2 separate IndicatorNames/IndicatorValues when you do the PDF extraction?

I realize that there are a few companies that do not break out DepreciationAmortization on their PL, and I think in those cases then the DepreciationAmortizationPL would probably just be NULL, but DepreciationAmortizationCF value can be the one from the CF statement.

What do you think? Could be clearer, I think.

Charles





Comments

  • Hi Charles,
    yes this is right. The reason we chose D&A from the cash flow is that (as you mention too) it is just very rarely reported in the P&L (and there is a field for that in the P&L, that you can access with the API for example, so the two D&A values are saved separately).

    I'm curious why you think that it might "double count" values?
  • Hi Thomas,

    Actually the more I think about it, I think you're right! Using the D&A from CF statement includes all of the D&A and shouldn't "double-count" at all. It makes sense!

    Hey, if the D&A reported on PL is available via API, can you include it in the bulk download in future releases? Or is that too difficult? I'd also request that all values available via API get included in bulk download (again only if it isn't too difficult). Related to this I'll post separately questions about this regarding API usage.

    Charles



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