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May 31, 2024
9 Free Financial Modeling Lessons
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anyone?
Use adjusted for your entry and exit valuations. I would show both on the IS for illustrative purposes so people can see both. Where it's really important is the cash flow statement where you walk from EBITDA down to Free Cash Flow. I typically use reported EBITDA because it will have been burdened for all the one-time cash expenses that adjusted EBITDA is excluding. You can use Adjusted EBITDA just make sure to subtract those actual cash charges out on the cash flow statement.
thank you!
My suggestion would be using reported figures for everything; however just also showing implied entry/ exit multiples based on adjusted figures. And i fully agree, showing adjusted & reported on IS is a good idea.
Neither - use your brain, read the adjustments, see which ones you think are actually good adjustments, and include those. Make clear which adjustments you do/don’t include.
I mean if a business pays its CEO/owner $5,000,000 in bonuses every year and he’s not going with the business, that’s a pretty reasonable add-back!
I’ve done 5+ of these and always got good feedback on my case work.
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