How to calculate free cash flow from EBITDA?

EBITDA = Earnings + Interest + Taxes + Depreciation & Amortization Note that the earnings used for this calculation are net profit after tax or the income statement’s bottom line. So let us now look at calculating Free Cash Flow to Equity and Free Cash Flow to Firm from EBITDA. What is Free Cash Flow from EBITDA?

What are examples of free cash flow from EBITDA?

Given below are some examples of free cash flow from EBITDA. Consider a tea company with $400,000 in depreciation, amortization, and an EBITDA of $20 million. It has $3 million in net debts and pays $200,000 as interest expenses. The capital expenditure for the year is $80,000. Also, consider $400,000 to be the change in its net working capital.

What is the difference between free cash flow and EBITDA?

Both free cash flow (FCF) and earnings before interest, tax, depreciation, and amortization (EBITDA) are methods for examining the earnings a business generates. Each method has its pros and cons as a measure, but EBITDA may be more useful when comparing the performance of different companies.