Hi,
Can someone please explain to me why EBITDA will overestimate cash flow from operations if working capital is growing?
cpk123
#2
In https://www.analystforum.com/forums/cfa-forums/cfa-level-ii-forum/91333103
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A overestimates B => A > B
CFO = EBITDA(1-T) - WCInv
=> EBITDA > CFO when WCInv > -(EBITDA . T), which is likely true when WCInv is growing.