People Stories - Monday Morning Memo

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Warren Buffett:
We at Berkshire will spend more than our depreciation this year. We spent more than our depreciation last year. We spent more than our depreciation the year before that. Depreciation is a real expense just as much as the expenditure for lights. It’s not a non-cash expense. It’s a cash expense. You just spend it first. The cash is gone. It’s a delayed recording of a cash expense. How anybody can turn that into something they use as a metric that talks about earnings is beyond me. Charlie?

Charlie Munger:
Yeah. I think you would understand any presentation using the word EBITDA – if every time you saw that word – you just substituted the phrase ‘bullshit earnings.’

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- transcribed from a video of Warren and Charlie addressing a crowd from behind an elevated countertop.

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