easy · Investment Banking
Why is 'EBITDA' often criticized by valuation practitioners as a proxy for cash flow?
- Because it is a levered metric that already subtracts interest payments from revenue.
- Because it is always higher than the actual total revenue generated by the firm.
- Because it includes non-operating income items, such as one-time gains recognized from asset sales.
- Because it ignores the cash required for capital expenditures and working capital changes.
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