Why EBITDA Is Not the Same Thing as Cash Flow

EBITDA is often used as a shorthand for operating performance, but it does not measure the cash a company actually generates. Understanding the difference—and knowing how to bridge from EBITDA to cash flow—is essential for valuation, credit analysis, and investment banking interviews.

Author: Alex Johnson Updated 3 min read

What EBITDA Measures

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It starts with accounting earnings and excludes several expenses to make operating performance easier to compare across companies with different capital structures, tax profiles, and non-cash charges.

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