$100 Revenue, $20 COGS, $40 Operating Profit, $10 D&A, $5 Interest Expense, $24 Net Income. What is the gross margin? What is EBITDA? What would you diligence to judge it as an LBO candidate?

Question

IBPrep · Accepted Answer

Gross margin = (Revenue - COGS) / Revenue = ($100 - $20) / $100 = 80%.

EBITDA = EBIT + D&A = $40 + $10 = $50.

$100 Revenue, $20 COGS, $40 Operating Profit, $10 D&A, $5 Interest Expense, $24 Net Income. What is the gross margin? What is EBITDA? What would you diligence to judge it as an LBO candidate?

Answer

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