Question

Background: You are the Board of Acme Manufacturing. The Chief Financial Officer is presenting the income statements for the last two years (2013 and 2014). She presented the following results (all numbers are in thousands of $):

	2013	2014
Revenue	$10,500	$15,200
Costs of Goods Sold	5,000	5,500
Gross Profit	5,500	9,700
Sales and General Administration Costs	1,000	1,200
R&D Expense	200	200

You are also told the depreciation in 2013 was $700, taxes were $1,600 and interest expenses were $100. You do not have that information for 2014.

1 What is the EBITDA for 2014 ?

2 What is the EBITDA for 2013 ?

3 What is the EBIT for 2013 ?

4 What is the EAT for 2013 ?

Additional Background: You are further told that the balance sheet at the end of 2013 had $10,000 in Assets and $7,500 in liabilities. By difference you can figure out the owner’s equity at the end of 2013. During 2014 the company retained $500 after paying out the remainder of EAT to shareholders as a dividend. No shares were issued or bought back during the period. There was no additional debt issued or bought back.

5 What are the Assets on the Balance Sheet at the end of 2014 ?

6 What are is the owner’s equity at the end of 2014 ?

Answer 1

Particulars				2013	2014
Revenue				10500	15200
less: Cost of goods sold				5000	5500
Gross Profit				5500	9700
Sales & general adm cost				1000	1200
R & D expenses				200	200
Depreciation				700
Tax				1600
interest exp				100
assets				10000
laibility				7500
owner's equity				2500
EBITDA= Revenue- exp(excluding dep on tax & intt)
1) EBITDA for 2014= 15200-(5500+1200+200)= 8300
2) EBITDA FOR 2013 = 10500-(5000+1000+200) = 4300
3) EBITDA for 2013= Revenue-operating exp
EBITDA= 10500-(5000+1000+200+700)= 3600
4) EAT for 2013 = Revenue-expenses
10500-(5000+1000+200+700+1600+100) = 1900

5) owners equity in 2014 = assets-laibility

owner's equity in 2014 = 10000-7500 = 2500

6) assets on balance sheet in beginning of 2014 =16300+5500 = 24900