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EBITDA is a poor proxy for FCFF & FCFE because?

April 8, 2017

EBITDA is a poor proxy for FCFF because it does not incorporate the cash taxes paid. EBITDA also fails to reflect the investment in working capital and fixed capital.

EBITDA is an even worse proxy for FCFE as it does not reflect net borrowings or repayment of debt.

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From → Asset Valuation

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