Why EBITDA Doesn’t Spell Cash Flow And What Does
A frequent speaker, instructor, advisor, and writer on credit risk and commercial banking topics and issues, Dev is the principal of Devon Risk Advisory Group and engages in consulting, speaking, and training on a wide range of risk, credit, and lending topics. As a former SVP and senior credit policy officer at SunTrust Bank, Atlanta, he was responsible for developing, implementing, and administering credit policies for SunTrust's wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking, and private wealth management. He also spent three years as managing director and credit approver in SunTrust's Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, Dev was chief credit officer for Barnett Bank's Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, Dev's experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor in Hawaii, Missouri, and Florida. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii.
Dev serves as an instructor in RMA's Florida Commercial Lending School, the Stonier Graduate School of Banking, the Southwestern Graduate School of Banking, and the American Bankers Association's (ABA) Commercial Lending. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA), and the AICPA.
Dev has written about credit risk management, financial analysis, and related subjects for the ABA's Commercial Insights, the Risk Management Association's RMA Journal, and other business professional journals. He is the author of Analyzing Construction Contractors and its related RMA workshop. A past national chair of RMA and former Florida Chapter president, Dev serves as a member of the RMA Journal's advisory board, and an ex-officio board member of the Florida and Atlanta RMA chapters. He also serves on the advisory board of the Atlanta Chapter of the Professional Risk Managers' International Association (PRMIA), and he has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department's Financial Service Volunteer Corps (FSVC).
EBITDA is a popular measure of cash flow, but it is not accurate, and bankers and investors who rely on it as a reliable indicator of repayment ability will be deeply disappointed. The session includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools.
- Definition of EBITDA
- Origins of EBITDA—its relationship to traditional cash flow (TCF)
- Problems with TCF and EBITDA
- SEC crackdown on EBITDA and adjusted EBITDA
- Alternatives to EBITDA—Operating Cash Flow, Net Cash after Operation, Net Cash Income, Cash after Debt Amortization, and Free Cash Flow
- Case Study
Course Level - Basic/Fundamental
Who Should Attend
- Credit Analysts and Credit Approvers
- Commercial Bankers and their Managers
- Chief Credit Officers
- Loan Review Officers
- Commercial Underwriters
Why Should You Attend
This session will explain why EBITDA(Earnings before Interest, Taxes, Depreciation, and Amortization) does not measure cash flow and what more accurate measures are available.