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Pseudo-Cash Flow Measures

Pseudo-Cash Flow Measures. Alternate Cash Flow Measures. EBITDA Free cash flow Discretionary cash flow. EBITDA. E arnings B efore Interest, Taxes, Depreciation, and Amortization. An alternative measure of operating cash flow

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Pseudo-Cash Flow Measures

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  1. Pseudo-Cash Flow Measures

  2. Alternate Cash Flow Measures • EBITDA • Free cash flow • Discretionary cash flow

  3. EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization An alternative measure of operating cash flow Depreciation and/or amortization are typically the largest non-cash expenses

  4. Free Cash Flow (FCF) Cash flow from operations – Capital expenditures Free Cash Flow = • Reveals the strength of a company’s cash flow • Indicates how much cash flow is available for general corporate use

  5. Discretionary Cash Flow (DCF) Discretionary Cash Flow Cash flow from operations Required debt payments Dividend payments – – = • A measure of excess cash flow • Indicates how much internally-generated operating cash flow is available for discretionary, value-creating actions

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