A Deep Dive Into Earnings Quality with Columbia Professor Doron Nissim
Excess Returns
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Using PE Versus EV to EBITDA
When companies capitalize costs, the cost that should have been expensed is affecting EBITDA in a permanent way. Many of these issues you can address. You want to combine quality factors into the analysis too. And if you condition the value ratio on everything that affects it and you find yourself with the residual, that is either positive or negative, you want to essentially invest based on that residual rather than PE itself.
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