Can someone pls explain why if WcInv is growing, EBITDA would overstate CFO and ignore revenue recognition policies?
CFO = Net income adjusted for chnages in working capital.
EBITDA does not. If you are using it as proxy for CFO you are assimg all revenue is cash and all costs are cash.
What i fcompnay has grown slaes by offering 1 years credit tems and got discounts on purchases by bulk buy excess invesntory and paying cash.
EBITDA may look good - strong sales, strong margins but CFO could be negative.
Thank you very clear!