How do the shortlines and regionals compare with the big class 1s in terms of profitability? The big carriers have been posting enviable operating ratios of 80% and better…are shortlines as profitable?
Operating ratio is not a direct measure of profitability, it is only a measure of operating efficiency. Generally, short line operating ratios are higher than Class 1s as they receive less revenue.
Short lines are nowhere near as profitable as Class 1 railroads as the larger lines have a significant amount of control over rates. It has been said that overall the short lines get about a dime for every dollar of railroad revenue. Obviously, revenue and expense have to be evaluated to get any measure of the EBITDA or other evaluation of the true profitability of any business.
LC
Not to be silly, but what’s “EBITDA” mean?
EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization.
In layman’s terms, it’s a method to convert Net Income (Or Earnings) on an Accrual Basis Financial Statement into the Cash Basis by adding back (or subtracting) Income Tax Expense, Depreciation Expense, Interest Expense/Income & any Amortized Items (can be Revenue or Expense) to get EBITDA. It’s another measure to determine the health of a business.
Why the financial analysts can’t just use the Statement of Cash Flows instead which converts Net Income into the cash basis anyway is beyond me, but that’s just my [2c].
Hopefully that’s a good enough explanation without getting too complex…
It is a standard measure of an operating business cash flow before adjustments for tax purposes. The acronym literally stands for:
“Earnings Before Income Taxes Depreciation and Amortization”
LC
LC
Tray again.[}:)][:D]