In year 1, EV/EBITDA is 4x and EV/Revenue is 1x. In year 2, EV/EBITDA is 2x and EV/Revenue is 1x. Assuming EV is constant, what is the change in EBITDA margin?

Question

IBPrep · Accepted Answer

Hold EV constant at 20.

Year 1: Revenue = EV / (EV/Revenue) = 20 / 1 = 20.

In year 1, EV/EBITDA is 4x and EV/Revenue is 1x. In year 2, EV/EBITDA is 2x and EV/Revenue is 1x. Assuming EV is constant, what is the change in EBITDA margin?

Answer

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