• At times EBITDA is used as a quick and dirty proxy of the firm’s free cash flow.
• But free cash flow as we will learn includes capital investment, changes in tax assets and liabilities and changes in working capital.
• Given that EBITDA ignores the company’s debt, tax and capital obligations it remains open to manipulation by the management and gives an incomplete picture of profitability.
• Therefore, many investors/analysts who use EV/EBITDA to value companies compliment this by using EV/EBIT as well to value the company.
• Capital intensive industries such as autos, shipping, telecom and transportation amongst others are extremely capital heavy industries and using EBITDA measures to analyse profitability of these companies ignores a critical component that weighs on valuation i.e. capex.
We have an 88% placement rate for our 4 to 8 weeks training programs conducted in 2017/18/19 with students going on to secure jobs at marquee investment banks such as Goldman Sachs, Credit Suisse, Morgan Stanley, Citi Bank and Deutsche Bank among others. Please send your CV to email@example.com to check your eligibility for the course.