EBITDA is the starting point, not cash in the bank.
About the financial example: All figures shown in the chart are hypothetical and are provided solely to illustrate differences in business economics; they are not actual Orca client results. Strong accounting profits do not guarantee liquidity. Cash conversion depends on collections, the timing of expenses, working capital, taxes, and reinvestment.
One of the quickest ways to misunderstand a business is to assume that a strong income statement means cash is healthy. Profitability matters, but collections, working capital and reinvestment determine whether those profits are actually available to the owner.
Follow the dollars, not just the percentage
If sales rise faster than billing discipline or collections improve, growth can consume cash. A firm can celebrate a new client and still have to finance the payroll associated with that engagement long before the invoice is paid. When the cash cycle stretches, management has less room to invest in hiring, technology or acquisitions.
This is why an operating review should pair revenue and margin with days sales outstanding, aging receivables, unbilled work, cash commitments and an updated thirteen-week liquidity outlook. Each measure has an owner and a practical response. A dashboard by itself is not a control system.
A useful management question
Ask what portion of every incremental dollar of revenue becomes cash after servicing the client, funding growth and meeting recurring obligations. The answer is different by business model and maturity. The discipline is to know it, explain movement and improve it.