EBITDA is cash flow
Definition: EBITDA excludes changes in working capital, capital expenditures, and debt service — all of which consume or generate cash. Free Cash Flow (FCF) or…
Reality
EBITDA excludes changes in working capital, capital expenditures, and debt service — all of which consume or generate cash. Free Cash Flow (FCF) or Cash Flow from Operations are the proper measures of cash generation.
Why It MattersUnderstanding why "ebitda is cash flow" is a misconception helps avoid analytical errors and improper financial decision-making.
CategoryFinancial Analysis