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Accruals, Free Cash Flows, and EBITDA for Agribusiness Firms

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  • Trejo-Pech, Carlos Omar
  • Weldon, Richard N.
  • House, Lisa
  • Salas-Gutierrez, Tomas

Abstract

This study explores the relationships between the accrual and cash flow components of earnings for agribusiness. Three accrual models with their respective cash flows, free cash flows, and free cash flows to equity are analyzed. Results for the agribusiness industry are compared with results from previous studies of all firms. Earnings Before Interests, Taxes, Depreciation, and Amortization (EBITDA), a measure frequently recommended as a proxy for cash flow is tested using these models. Empirical results show that both the magnitude and the behavior of EBITDA differ from cash flows and should not be used as a proxy.

Suggested Citation

  • Trejo-Pech, Carlos Omar & Weldon, Richard N. & House, Lisa & Salas-Gutierrez, Tomas, 2006. "Accruals, Free Cash Flows, and EBITDA for Agribusiness Firms," 2006 Annual meeting, July 23-26, Long Beach, CA 21152, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21152
    DOI: 10.22004/ag.econ.21152
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    References listed on IDEAS

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