$400 Revenue, $100 COGS, $160 Operating Profit, $40 D&A, $20 Interest Expense, $100 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 = ($400 - $100) / $400 = 75%.

EBITDA = EBIT + D&A = $160 + $40 = $200.

$400 Revenue, $100 COGS, $160 Operating Profit, $40 D&A, $20 Interest Expense, $100 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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$400 Revenue, $100 COGS, $160