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As investors engage in an increasingly desperate global competition for higher-yielding securities, debt issuers appear to be taking advantage of the extraordinary demand by manipulating one of Wall Street’s favorite metrics of profitability.

The measure is known as Ebitda — earnings before interest, taxes, depreciation and amortization — and Wall Street bankers, traders and research analysts use it as a way to discuss whether a company or its stock is overvalued or undervalued because it ostensibly provides a picture of “normal” operating earnings. Creditors use the growth or decline of Ebitda to determine debtors’ ability to pay back their loans.

Lately, though, debt issuers are taking unusual license in how they calculate their Ebitda, according to a thoughtful report written last November by Christina Padgett, a senior vice president and head of leveraged finance at Moody’s Investors Service, and her colleagues. Companies can include items like projected savings to tailor Ebitda even if there’s a chance those savings will never be realized.

On the other side of the equation, investors are being less than vigilant in questioning what goes into the Ebitda calculation. The combination of the two trends can lead to turmoil in the proper functioning of the credit markets, which in turn could choke off the country’s nascent economic recovery.

“Market participants use Ebitda as a proxy for normalized pretax unlevered operating earnings,” Ms. Padgett wrote in the essay, “Ebitda: Used and Abused.” “But what constitutes ‘normal’ is subjective, and we find that in periods of low risk tolerance, issuers more aggressively calculate Ebitda to improve their credit metrics and facilitate market access.”

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One example of this trend came last spring, with the $2.4 billion debt financing of William Morris Endeavor’s acquisition of IMG, the sports, entertainment and marketing giant, which I wrote about in Vanity Fair. In its bank financing documents, William Morris described to potential bank lenders something it called “financeable Ebitda,” a combination of both firms’ actual Ebitda plus a number of one-time add-backs and expected cost savings. According to the documents, William Morris and IMG had a combined actual Ebitda of $238 million for 2013. But the “financeable Ebitda” for 2013 that the firms asked bankers to endorse was $448 million, 88 percent higher than the actual performance.

William Morris wanted bankers to give it credit for achieving $156 million in savings that the merger was expected to produce and ignore such “one-time” expenses like $12 million for “severance,” $6 million for litigation, $24 million for “business building initiatives” and $12 million for “onerous leases and acquisition costs.” Needless to say, with the lending markets white hot, the bankers threw money at the two firms, giving William Morris the entire $2.4 billion it was seeking in a deal many times oversubscribed.

But which Ebitda is actually achieved makes a big difference. If it’s the full $448 million of “financeable Ebitda,” then the debt multiple is a reasonable 5.35 times Ebitda, and creditors will be relatively happy. If it’s only $238 million, then the multiple is a far shakier 10 times Ebitda and the red flags start to go up. More than likely, the combined firm didn’t achieve the full $448 million in 2014 but did generate more than the $238 million. According to Silver Lake Partners, the private equity firm that owns 50 percent of the William Morris, through nine months of 2014, its Ebitda was $200 million, about 16 percent above the same period in 2013. In November, Egon Durban, the Silver Lake partner behind the William Morris-IMG deal, told The Financial Times that the company would be one of Silver Lake’s “highest returning investments,” which is saying something given the boatloads of money Silver Lake made from its investments in Alibaba and Skype.

The larger point is that companies are pushing the boundaries of Ebitda and financiers are willing to look the other way as they get pushed. “The current spate of issuers with highly adjusted Ebitda will require a more disciplined approach to credit analysis,” Ms. Padgett wrote in her report. “Ebitda cannot be taken at face value and generally should be evaluated alongside other liquidity and cash metrics. Overly optimistic adjustments, pro forma for ‘future synergies,’ ‘future earnings’ or ‘run-rate Ebitda’ will leave investors vulnerable to the next credit default cycle downturn.”

In an interview, Ms. Padgett reiterated that playing fast and loose with what constitutes Ebitda remains a problem for investors. She said that because the market remained overheated, lenders and investors were facing huge pressure from issuers to make fast decisions about whether to participate in deals without taking enough time to investigate the Ebitda numbers. Not unlike the William Morris-IMG deal, Ms. Padgett said, “I have seen Ebitda defined to include synergies not achieved, which is just kind of dumbfounding to me.” The market participants, she continued, are well aware that this is going on and are trying to balance “their desire for fees versus relative risk. The people buying the loans are saying, ‘I have to do something with my capital.’”

That leads to the current market conundrum that risk is being mispriced. Of the leveraged loan market, Ms. Padgett contends, “No one ever said it wasn’t risky. We’re putting low ratings on these loans. We’re saying these are high risk.”

The question hanging in the air remains: Is anyone out there paying attention?