👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.
EBITDA and FCF are often used interchangeably in the context of profitability. Both drop out of the bottom of your P&L, and are linked to company valuation. But similar to how olive oil and sun tan oil are both oils, you can eat one, while the other is only for superficial purposes.
What the hell do I mean?
If I were to sum it up, EBITDA is used to compare companies on the surface, while Free Cash Flow can be consumed. Let’s dig in.
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