Because firms cannot hide operating cash flows in the EBITDA measure, it will likely become more important in future financial analysis.

Question

Quizplus · Accepted Answer

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) does not directly measure operating cash flows, as it excludes changes in working capital and capital expenditures, which are key components of cash flow from operations.

Because Firms Cannot Hide Operating Cash Flows in the EBITDA