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 also includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools.
WHY SHOULD YOU ATTEND?
Reliance on EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) as a measure of cash flow is misplaced because it presumes that borrowers will pay lenders before paying their taxes, expanding their working capital assets, and fixed assets to support sales growth, among other things. Bankers and investors who rely on it as a reliable indicator of repayment ability will overestimate available cash flow and underestimate the risk of default.
This session will explain why EBITDA does not measure cash flow and what more accurate measures are available.
AREA COVERED
- Definition of EBITDA
- Origins of E
- BITDA—its relationship to traditional cash flow (TCF)
- Problems with EBITDA
- Alternatives to EBITDA—Operating Cash Flow and Free Cash Flow
LEARNING OBJECTIVES
- Define and explain why EBITDA is used and why it is so popular
- Explain EBITDA’s shortcomings as an accurate, reliable measure of cash flow
- Offer more accurate debt repayment measures of cash flow, including how to convert EBITDA into free cash flow for measuring debt repayment ability
- Demonstrate differences between EBITDA and free cash flow in case studies
WHO WILL BENEFIT?
- 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
Reliance on EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) as a measure of cash flow is misplaced because it presumes that borrowers will pay lenders before paying their taxes, expanding their working capital assets, and fixed assets to support sales growth, among other things. Bankers and investors who rely on it as a reliable indicator of repayment ability will overestimate available cash flow and underestimate the risk of default.
This session will explain why EBITDA does not measure cash flow and what more accurate measures are available.
- Definition of EBITDA
- Origins of E
- BITDA—its relationship to traditional cash flow (TCF)
- Problems with EBITDA
- Alternatives to EBITDA—Operating Cash Flow and Free Cash Flow
- Define and explain why EBITDA is used and why it is so popular
- Explain EBITDA’s shortcomings as an accurate, reliable measure of cash flow
- Offer more accurate debt repayment measures of cash flow, including how to convert EBITDA into free cash flow for measuring debt repayment ability
- Demonstrate differences between EBITDA and free cash flow in case studies
- 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
Speaker Profile

A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC). PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are …
Upcoming Webinars

Leadership: Strategic Planning and Decision Making

The Top Ten Excel Functions Everyone Should Know


2-Hour Virtual Seminar on How to Conduct an Internal Harass…

2025 Handbook Overhaul: Navigating Critical Updates! Federa…


3-Hour Virtual Boot Camp on Easier Excel Automation with VB…

Outlook - Master your Mailbox - Inbox Hero Inbox Zero


Empowering Conflict Resolution: Letting Go to Gain Control


Retention Starts Here: Stop Losing Your Critical Talent and…


Gossip-Free: Leadership Techniques to Quell Office Chatter

California Meal and Rest Breaks: What You Don't Know Can Co…

Managing Difficult Employee Conversations


Harassment, Bullying, Gossip, Confrontational and Disruptiv…

Managing Toxic Employees: Strategies For Leaders To Effecti…

Workplace Investigations 101: How to Conduct your Investiga…

Copilot and HR: An Introduction for HR Professionals

Excel Power Skills: Master Functions, Formulas, and Macros …



6-Hour Virtual Seminar on Learning the Highlights of Excel …

Bootcamp for New Managers and Supervisors: Develop These Es…

Stress, Change And Team Resilience Through Humor: An Intera…


Is Your Workforce Change Ready? A Leader’s Guide to Quickly…