1. Is EBITDA used as a proxy for cash flow?

No, not at all. EBITDA does not take into account changes in working capital and capital expenditure. Therefore, you should only regard it as a measure of operating performance and then verify it with cash from operations and free cash flow.

2. When is EBIT more appropriate than EBITDA?

It is when the asset wear and replacement have a significant impact on the company's economics. Since EBIT retains Depreciation & Amortisation in the calculation, it is helpful in situations where capex cycles and asset age determine margins.

3. What could be the reasons for Operating Profit being different from EBIT?

In case the company has significant non-operating income/expense below the operating line, EBIT will be different from operating profit. You should examine the layout of the statement and the notes in detail.

4. What valuation multiple should I use for my initial analysis?

Use EV/EBITDA as a first step for a wide overview, then drill down with EV/EBIT and price-to-Operating-Profit for a detailed analysis. Take the time to always work back from cash and returns (ROCE/ROIC).

5. How can I keep myself from being deceived by “adjusted” numbers?

Firstly, you should check the reconciliations in the financial statements. Secondly, compare them with the statutory Operating Profit. Thirdly, make sure that the adjustments are really non-recurring when looking at several periods. Dhan makes this practical, tracking Operating Profit, EBITDA vs EBIT, cash conversion, and sector-wise screens in one place so you can value businesses with clarity and speed.