Module IV· Cash FlowBasic
Question
Why is EBITDA NOT the same as cash flow?
Answer
EBITDA is a P&L measure
it ignores 4 critical cash items:
| Item | EBITDA | Cash Flow |
|---|---|---|
| Capex | not included | deducted |
| ΔWC | not included | deducted |
| Cash taxes | pre-tax | deducted |
| Interest | pre-interest | deducted |
Example
EBITDA of $80m can, after Capex/WC/taxes/interest, leave only $25-35m of cash flow.
Pitch tip
'Walk me through EBITDA to Cash Flow' → 'EBITDA minus cash taxes minus Capex minus WC minus interest = FCF before amortization'. Answer directly, don't waffle.