Why EBITDA Doesn’t Spell Cash Flow - But What Does?
EBITDA is a popular measure of cash flow, but it is not accurate! Bankers and investors who rely on it as an indicator of repayment ability will be deeply disappointed. This one hour session includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools that actually measure repayment ability from cash flow. (Rec. 12/14/21)
Recorded: December 14, 2021
EBITDA is a popular measure of cash flow, but it is not accurate, and bankers and investors who rely on it as a reliable indicator of repayment ability will be deeply disappointed. This one hour session includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools that actually measure repayment ability from cash flow. The basic problem with EBITDA is that it overestimates the amount of borrower’s cash flow and may result in an erroneous credit decision.
Specific topics to be covered include:
- Definition of EBITDA
- Origins of EBITDA—its relationship to traditional cash flow (TCF)
- Problems with EBITDA
- Alternatives to EBITDA—Operating Cash Flow and Free Cash Flow
A case study throughout the session illustrates how to calculate TCF, EBITDA, operating cash flow and free cash flow so participants can see for themselves the differences among the measures.
- Your registration includes:
- A copy of the presentation materials
- Unlimited video replay
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