3min chapter

M&A Talk (Mergers & Acquisitions), by Morgan & Westfield cover image

The Art and Science of Valuing a Middle-Market Business

M&A Talk (Mergers & Acquisitions), by Morgan & Westfield

CHAPTER

Is EBITDA the Most Popular Measure of Cash Flow?

EBITDA is used because it takes out the non-cash items such as depreciation and amortization of a company. Free cash flow in essence, if you will, is taking a firm's earnings and then adjusting them by adding back that depreciation andAmortization expense. That's considered to be on income versus relates to kind of an economics earning exercise.

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