A Batik-Wrapped Guide to Decoding Startup Financial Reports: Two Metrics That Matter

Hello, Ridehaluers! We’re glad you enjoyed our writing on “Navigating the Jungle of EBITDA and Adjusted EBITDA — A Laughably Simple Guide by Ridehaluing.”

After reading it, a ridehaluer raises an interesting question: if Adjusted EBITDA and EBITDA must be read carefully, what are the fundamental metrics that matter to measure a company’s financial health?

Before we delve deeper, remember that metrics in financial reports are akin to ingredients in Gado-Gado; each contributes to the full flavor of a company’s financial health. However, the two ‘spiciest’ ones we should focus on are Free Cash Flow (FCF) and Net Income.

Free Cash Flow is the cash a company has left after paying its operating expenses and capital expenditures. Imagine you’re running a Warteg; it’s the money remaining after buying ingredients and fixing that leaky roof. A startup with consistently positive FCF is like a Bajaj driver with a full tank of petrol — ready to go the distance.

If a startup boasts about its Adjusted EBITDA, but its FCF is similar to your wallet after a shopping spree in Grand Indonesia (almost empty), they are not as profitable as they appear. Much like a shadow puppet show (Wayang), the real story is what’s happening behind the scenes.

Next up, Net Income. Considering all expenses, this is a company’s total earnings (or profit). If Free Cash Flow is the petrol in the Bajaj, Net Income reflects the overall health of the Bajaj itself. Positive Net Income indicates that the company isn’t only generating revenue but also making a profit after all expenses are considered. Like a well-prepared Nasi Campur, it includes everything — meat, vegetables, and even that sambal that ablaze your tongue.

So, dear ridehaluers, remember to look beyond the glamour of Adjusted EBITDA. It can be like the flashy fireworks on New Year’s Eve in Ancol — stunning but fleeting. Dive deeper into the financial sea to the Free Cash Flow and Net Income bedrock. They’re the real heroes, standing as firm as the Borobudur Temple, offering insights into the company’s profitability and long-term sustainability.

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