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 Course will explain why EBITDA does not measure cash flow and what more accurate measures are available.

Description of Topic:   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.  The session includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools.

Specific 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 Will Benefit: 

Credit analysts and credit approvers, commercial bankers and their managers, chief credit officers, loan review officers, commercial underwriters