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← Series 79: Collection, Analysis & Evaluation of Data
Series 79 practice questioneasyFinancial Statement Analysis

Apex Systems reports revenue of $120 million, cost of goods sold of $62 million, SG&A expense of $18 million, and depreciation of $6 million. What is EBITDA?

  1. A$40 million✓ Correct answer
  2. B$34 million
  3. C$46 million
  4. D$34 million
Explanation

Why A — $40 million

$40 million EBITDA is calculated before depreciation and amortization, so the analyst subtracts COGS and SG&A from revenue but does not subtract depreciation. Investment bankers rely on EBITDA to compare operating performance across companies with different capital structures and depreciation policies.

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