Ebitda me jo revenue liye hay, kya wo collect hua hay? Ebitda me jo cogs liye hay….kya wo inventory ka payment hua hay? Since working capital is increasing, it means debtors are increasing at a much faster rate….it means revenue ka collection nahi ho raha hay……hence ebitda is overstating cashflow CFRead more
Ebitda me jo revenue liye hay, kya wo collect hua hay?
Ebitda me jo cogs liye hay….kya wo inventory ka payment hua hay?
Since working capital is increasing, it means debtors are increasing at a much faster rate….it means revenue ka collection nahi ho raha hay……hence ebitda is overstating cashflow
CFO captures the changes in working capital accounts. If working capital is increasing (CA increase more than CL), then the firm is using cash to build up those CA’s. EBITDA does not capture the changes in working capital accounts, hence, it overstates CFO.
Relative Valuation
Ebitda me jo revenue liye hay, kya wo collect hua hay? Ebitda me jo cogs liye hay….kya wo inventory ka payment hua hay? Since working capital is increasing, it means debtors are increasing at a much faster rate….it means revenue ka collection nahi ho raha hay……hence ebitda is overstating cashflow CFRead more
Ebitda me jo revenue liye hay, kya wo collect hua hay?
Ebitda me jo cogs liye hay….kya wo inventory ka payment hua hay?
Since working capital is increasing, it means debtors are increasing at a much faster rate….it means revenue ka collection nahi ho raha hay……hence ebitda is overstating cashflow
CFO captures the changes in working capital accounts. If working capital is increasing (CA increase more than CL), then the firm is using cash to build up those CA’s. EBITDA does not capture the changes in working capital accounts, hence, it overstates CFO.
Hope it helps 🙂
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