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Same EBITDA, very different cash
The prompt
Two fictional companies each report EBITDA of USD 100 million. A mobile operator in Southeast Asia has depreciation of 45 and spends 50 a year on its network. A software firm has depreciation of 5, spends 5 a year on equipment, and its working capital falls by 5 because customers pay a year in advance. Tax is 20 percent for both (illustrative). Which business produces more cash?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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