EBITDA and Working Capital

Hi,

Can someone please explain to me why EBITDA will overestimate cash flow from operations if working capital is growing?

In https://www.analystforum.com/forums/cfa-forums/cfa-level-ii-forum/91333103

1 Like

A overestimates B => A > B

CFO = EBITDA(1-T) - WCInv

=> EBITDA > CFO when WCInv > -(EBITDA . T), which is likely true when WCInv is growing.