Call us at +1-(510)-868-1040

Login Register


    EBITDA Doesnt Spell Cash Flow and What Does - SHRM & HRCI Accredited

    Speaker: Dev Strischek


    Duration: 60 Minutes
    Product Code: 601073
    Avail our latest offer this holiday season! Apply Coupon Code XMAS10 and get 10% off on all our webinars. To know more, contact us through our Chat column or call +1-(510)-868-1040. Hurry! Limited Period Offer.

Reliance on EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) as a measure of cash flow is misplaced because it presumes that borrowers will pay lenders before paying their taxes, expanding their working capital assets and fixed assets to support sales growth, among other things. Bankers and investors who rely on it as a reliable indicator of repayment ability will overestimate available cash flow and underestimate the risk of default.

This session will explain why EBITDA does not measure cash flow and what more accurate measures are available, including cash flow from operations (CFO) and free cash flow (FCF).


Definition of EBITDA

  • Earnings before interest, taxes, depreciation & amortization

Origins of EBITDA

  • Began with Traditional Cash Flow (TCF) =Profits + Depreciation and Amortization
  • Adding interest and taxes to TCF

Problems with EBITDA

  • Assumes that borrowers will pay lenders and creditors before paying taxes and dividends
  • Assumes that sales growth doesn’t require additional working capital assets and capital assets
  • Weaknesses of EBITDA-based covenants

Alternatives to EBITDA

  • Cash flow from Operations (CFO) per FASB 95, now ACS 230
  • Free cash flow (FCF)

EBITDA is a popular measure of cash flow, but it is not accurate, and bankers and investors who rely on it as a reliable indicator of repayment ability will be deeply disappointed. This session will explain why EBITDA does not measure cash flow and what more accurate measures are available. The session also includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools.


  • Credit analysts
  • Credit managers
  • Loan review officers
  • Work-out officers
  • Commercial lenders
  • Credit Risk managers
  • Chief credit officers
  • Senior lenders
  • Senior lending officer
  • Bank director
  • Chief Executive Officer
  • President
  • Board chairman

A frequent speaker, instructor, advisor, and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) and Private Company Council (PCC). PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are more appropriate for privately held firms. He also serves as the PCC’s representative to FASB’s Credit Losses Transition Resource Group, supporting the new current expected credit loss (CECL) standard to be implemented in the fiscal year 2019 for public companies and 2020 for private firms.

The former SVP and senior credit policy officer at SunTrust Bank, Atlanta, he was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking, and private wealth management. He also spent three years as managing director and credit approver in SunTrust’s Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, he was chief credit officer for Barnett Bank’s Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, his experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii. 

Mr. Strischek serves as an instructor in several banking schools, including the Stonier Graduate School of Banking, and the Southwest Graduate School of Banking. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA), and the AICPA. He has written some 200 articles on credit risk management, financial analysis, and related subjects, and is the author of Analyzing Construction Contractors as well as the instructor of a contractor analysis workshop. A past national chair of RMA and former RMA Florida Chapter president, he has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department’s Financial Service Volunteer Corps (FSVC).

View all trainings by this speaker
 
  

Upcoming Webinars