Market based valuation_EV/EBITDA

jitender.grover99
Posts: 4
Joined: Mon Feb 15, 2016 11:13 am

Market based valuation_EV/EBITDA

Postby jitender.grover99 » Sun Feb 28, 2016 11:58 am

In scheweser it is given that " if working capital is growing, EBITDA will overstate CFO". Can you please explain how does this relation hold? Thanks.

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: Market based valuation_EV/EBITDA

Postby edupristine » Thu Mar 10, 2016 9:52 am

Hi Jitender
it is just because FCFE (free cash flow for the firm)is more preferable to operating cash flow, and free cash flow of a industry captures the capital amount of capital expenditure.so it highly connected with the valuation theory than EBITDA.


Return to “CFA Level II”



cron

Disclaimer

Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to abuse@edupristine.com and we will rectify it.