Some times it’s just not possible. Incentive comp hits EBITDA. There may be some bank covenants or loan requirements that need EBITDA to be certain amount or be above certain ratios or have certain amount of cash/AR on hand. There maybe a fee the company has to pay to the bank or lender for not being in compliance or even complete payback.
moysauce3 t1_j2ejzr9 wrote
Reply to comment by Generallybadadvice in ELI5: Why do companies require annual budget be spent 100%? by angrybird7677
Some times it’s just not possible. Incentive comp hits EBITDA. There may be some bank covenants or loan requirements that need EBITDA to be certain amount or be above certain ratios or have certain amount of cash/AR on hand. There maybe a fee the company has to pay to the bank or lender for not being in compliance or even complete payback.