Series 79 practice questioneasyFinancial Statement Analysis
Summit Retail reports revenue of $220 million, cost of goods sold of $132 million, SG&A expense of $18 million, and depreciation of $6 million. What is EBITDA?
- A$70 million✓ Correct answer
- B$64 million
- C$76 million
- D$64 million
Explanation
Why A — $70 million
$70 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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