16min chapter

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The Art of Finance: Joe Knight on Demystifying Numbers to Empower Businesses

FP&A Today

CHAPTER

Financial Reporting and the Pitfalls of EBITDA

This chapter explores the challenges and risks inherent in financial reporting, emphasizing the need for human judgment and cross-departmental collaboration to improve estimation accuracy. The speaker shares experiences from selling their business, highlighting the dangers of solely relying on EBITDA for company valuation. They stress the importance of verifying EBITDA with cash flow and prioritizing free cash flow over EBITDA in valuing a company for acquisition.

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