ebitda-doesn’t-spell-cash-flow-what-you-should-know

EBITDA Doesn’t Spell Cash Flow : What you should know

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Pre Recorded

  • 60 minutes

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 session will explain why EBITDA does not measure cash flow and what more accurate measures are available. The session includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools.

Join this session by expert speaker Dev Strischek, where he will explain why EBITDA does not measure cash flow and what more accurate measures are available.

Session Highlights:

  • Definition of EBITDA

  • Earnings before Interest, Taxes, Depreciation & Amortization

  • Problems with EBITDA

  • Assumes that borrowers will pay lenders and creditors before paying taxes and dividends

  • Assumes that sales growth doesn’t require additional working capital assets and capital assets

  • Weaknesses of EBITDA-based covenants

  • Origins of EBITDA—its relationship to traditional cash flow (TCF)

  • Began with Traditional Cash Flow (TCF) =Profits + Depreciation and Amortization

  • Adding Interest and Taxes to TCF

  • Alternatives to EBITDA—Operating Cash Flow and Free Cash Flow

  • Cash flow from operations (CFO) per FASB 95, now ACS 230

  • Free cash flow (FCF)

Why You Should Attend:

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.

Who Should Attend:

  • Credit Analysts

  • Credit Managers

  • Loan review officers

  • Work-out officers

  • Commercial lenders
  • Credit Risk Managers

  • Chief Credit Officers

  • Senior Lenders

  • Senior Lending Officer

  • Bank Director

  • Chief Executive Officer

  • President

  • Board Chairman


Advanced Preparation: None 

Program Level: Intermediate

Prerequisites: None 

Field of Study: Finance


*You may ask your Question directly to our expert during the Q&A session.

** You can buy On-Demand and view it as per your convenience.

Dev Strischek

Dev Strischek

A frequent speaker, instructor, advisor, and writer on credit risk and commercial banking topics and issues, Dev Strischek is principal of Devon Risk Advisory Group and engages in consulting, speaking and training on a wide range of risk, credit, and lending topics. As former SVP and senior credit policy officer at SunTrust Bank, Atlanta, he was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking, and private wealth management. He also spent three years as managing director and credit approver in SunTrust’s Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, Dev was chief credit officer for Barnett Bank’s Palm Beach market.

Besides stints at other banks in Florida, Kansas City, and Ohio, Dev’s experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor in Hawaii, Missouri, and Florida. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii. Dev serves as an instructor in RMA’s Florida Commercial Lending School, the Stonier Graduate School of Banking, and as both an instructor and as a member of the American Bankers Association's (ABA) Commercial Lending and Graduate Banking School advisory board. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA.

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