Profit without cash destroys wealth. These 3 stocks show how

Summary: Most investors chase earnings but not all profits translate into cash. Learn how poor cash conversion could erode returns of even profit making companies. Every investor loves a company that reports rising profits. It signals growth, market share and hopefully future returns. But profits can also be misleading. On paper, they may look dazzling; in reality, they may never make it to the company’s bank account. And when profits don’t translate into cash, shareholders end up paying the price. This is why cash flow matters more than accounting profits. And one simple ratio—CFO-to-EBITDA—can help you separate genuine wealth creators from profit mirages. The acid test: CFO-to-EBITDA EBITDA or earnings before interest, tax, depreciation and amortisation shows how much money a company earns from its operations before non-cash charges (like depreciation) and non-core costs (like interest and taxes). It’s good for gauging operating profitability across companies and industries. CFO (cash flow from operations) reflects the actual money flowing into the company’s coffers from its day-to-day busines