Don't get Trapped by the Alphabet Soup of Cash Flow Terminology

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Manage episode 289473521 series 2864315
Player FM과 저희 커뮤니티의 John & Jessica Martinka and Jessica Martinka 콘텐츠는 모두 원 저작자에게 속하며 Player FM이 아닌 작가가 저작권을 갖습니다. 오디오는 해당 서버에서 직접 스트리밍 됩니다. 구독 버튼을 눌러 Player FM에서 업데이트 현황을 확인하세요. 혹은 다른 팟캐스트 앱에서 URL을 불러오세요.

Profit, Net Operating Income, EBIT, EBITDA, SDE, Adjusted or Recast Earnings, and Free Cash Flow (which is the most important) - what do they all mean?
I dissect all of these terms and what they mean to business buyers, sellers, lenders, and valuation people.
A few things covered:

  • Using EBITDA to calculate return on investment on an asset heavy business is foolhardy.
  • Owner compensation is not discretionary, just like your mortgage, utility bills, etc. are discretionary.
  • Free cash flow is what it's all about.

And, this is covered in all my books including Chapter 45 in Getting the Deal Done!

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