Cash Flow vs. EBITDA: Guide to the Differences
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What Is Cash Flow?
Operating Cash Flow vs. Free Cash Flow
How Is Cash Flow Calculated?
What Is EBITDA?
How Is EBITDA Calculated?
Cash Flow vs. EBITDA
Both track the cash flow generated by a business's operations and ignore cash flow from investing or financing activities. Both are used to determine how a company's core operations are performing. Both add back depreciation and amortization to net income.
EBITDA doesn't factor in interest or taxes, whereas operating cash flow does, since they are cash outflows. Operating cash flow factors in changes in working capital (a business’s current assets minus its current liabilities): the EBITDA formula does not. Operating cash flow can show the signs of poor financial management, while EBITDA does not.
Cash Flow vs. EBITDA Example
Accounts receivable = ($200,000) Inventory = ($100,000) Accounts payable = $50,000 Accrued expenses = $25,000
Pros and Cons of Using Cash Flow
3 Lantern Small Business Loan Tips
Online lenders generally offer fast application reviews and quick access to cash. Conveniently, you can compare small business loans by filling out one application on Lantern by SoFi. If you are launching a new business or your business is young, lenders will consider your personal credit score. Eventually, though, you’ll want to establish your business credit. SBA loans are guaranteed by the U.S. Small Business Administration and typically offer favorable terms. They can also have more complicated applications and requirements than non-SBA business loans.
Frequently Asked Questions
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