Why EBITDA Doesn’t Spell Cash Flow But What Does
EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) 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 session will explain why EBITDA does not measure cash flow and what more accurate measures are available.Learning ObjectivesLearn how to calculate EBITDAUnderstand its weaknesses, especially why it does not calculate cash flow correctlyLearn how to employ alternative cash flow measures that accurately determine repayment abilityAreas CoveredDefinition of EBITDAOrigins of EBITDA—its relationship to traditional cash flow (TCF)Problems with TCF, EBITDA, and adjusted EBITDA SEC crackdown on EBITDA and adjusted EBITDAAlternatives to EBITDA—Operating Cash Flow, Net Cash after Operation, Net Cash Income, Cash after Debt Amortization, and Free Cash FlowCase StudyWho Should AttendCredit analysts and credit approvers, commercial bankers and their managers, chief credit officers, loan review officers, senior lender, commercial underwriters, loan committee members, bank directors, executive management
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EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) 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 session will explain why EBITDA does not measure cash flow and what more accurate measures are available.
Learning Objectives
- Learn how to calculate EBITDA
- Understand its weaknesses, especially why it does not calculate cash flow correctly
- Learn how to employ alternative cash flow measures that accurately determine repayment ability
Areas Covered
- Definition of EBITDA
- Origins of EBITDA—its relationship to traditional cash flow (TCF)
- Problems with TCF, EBITDA, and adjusted EBITDA
- SEC crackdown on EBITDA and adjusted EBITDA
- Alternatives to EBITDA—Operating Cash Flow, Net Cash after Operation, Net Cash Income, Cash after Debt Amortization, and Free Cash Flow
- Case Study
Who Should Attend
Credit analysts and credit approvers, commercial bankers and their managers, chief credit officers, loan review officers, senior lender, commercial underwriters, loan committee members, bank directors, executive management
