The Finance Gem 💎 #118: Your Finance Metrics Are Misleading You Into Making Bad Decisions

Hi there,

Most CEOs place enormous confidence in their metrics—far more than those metrics deserve.

EBITDA becomes the basis for valuation.
Free Cash Flow becomes the green light for major investments.
Net Income gets treated as a proxy for profitability.
Gross Margin gets used to gauge product or unit economics.

Individually, these numbers look credible. But without context, they distort decision-making, mask underlying risks, and create an illusion of performance that doesn’t hold up under real financial pressure.

In today’s issue, I’m breaking down why these commonly trusted KPIs mislead even experienced executives, how that misunderstanding affects EBITDA, cash flow, and valuation, and what financially intelligent leaders do differently.

Here’s what we’re covering this week:

• Black Friday 2025 is coming, and it will be exceptional—one deal per day, each available for 24 hours only.

• Why the metrics leaders rely on most—EBITDA, Free Cash Flow, Net Income, Gross Margin—regularly mislead decision-makers.

• How to interpret your KPIs through cash, capital intensity, and value creation so you avoid costly assumptions and make stronger strategic decisions.

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