Level-2 Equity EV/EBITDA

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erdieyuboglu

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In wiley there is a comment regarding the use of EV/EBITDA approach to valuation that “EBITDA overestimates cash flow from operations if working capital is growing.” Could anyone understand this sentence? I did not understand the relation.
 
When working capital is growing, there is a negative CFO associated with that growth; EBITDA doesn’t capture that negative CFO.
 
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