$120 Revenue, $36 COGS, $48 Operating Profit, $12 D&A, $8 Interest Expense, $28 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 = ($120 - $36) / $120 = 70%.

EBITDA = EBIT + D&A = $48 + $12 = $60.

$120 Revenue, $36 COGS, $48 Operating Profit, $12 D&A, $8 Interest Expense, $28 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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$120 Revenue, $36 COGS, $48