Market based valuation_EV/EBITDA

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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.

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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 it highly connected with the valuation theory than EBITDA.

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