EBITDA-CAC: I can’t work out whether this is inspired, mad as a bag of cats or both all at the same time. Hutchison Whampoa have come up with a new performance indicator for its third-generation mobile telecoms business 3 Group. It is actually an acronym for earnings before interest, taxation, depreciation and amortisation minus customer acquisition costs.The FT quotes an executive who claims that metric was invented to take account of “the market’s focus on the cash cost of building the 3 Group’s business.”
“The metric gives a better understanding of whether and when the business have achieved operating cash flow sufficient to cover the growth investment in CAC”.
CAC sounds the same as cack, English slang for for rubbish; surely a coincidence?
Kudos: 3 Group points the way in 3G by Tom Mitchell Financial Times (page 29) March 28, 2006.