Use EBITDA as cash flow proxy for simple model?
Sorry if this is basic; I'm in sponsors group lol.
I have a very simplified SaaS take home case study - they provided start ARR, net ARR % growth, opex year 0 and % growth, enough to get down to EBITDA. They gave starting cash balance as well.
Is it essentially fine to assume EBITDA as a cash flow proxy? Meaning to more or less ignore taxes, D&A, capex, change NWC
They want a few sentence write up / around what I think are important levers so assuming that just means; churn; opex % growth; ARR 'engine'.
Definitely not for SaaS
So you’d just assume maybe 25% tax rate, 2% D&A/Change WC/Capex as % of rev as simplifying assumptions then?
What if it’s a fully remote early stage startup? Not an established SaaS in the classical sense
Also need to account for change in deferred revenue. Assuming it’s a typical SaaS business with upfront payment, the structure will impact cash flows & be a key line item to consider
Also need to account for change in deferred revenue. Assuming it’s a typical SaaS business with upfront payment, the structure will impact cash flows & be a key line item to consider
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What were the exact instructions for the case study? If they're asking you to build out a full model, did they give you any insight into what type of SaaS this is? Term length?
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