SJMays07
Jun 10, 2010, 10:14 AM
Pearson Brothers recently reported an EBITDA of $9.5 million and net income of $2.7 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Round your answer to the nearest dollar, if necessary.
ArcSine
Jun 10, 2010, 02:00 PM
Ya got to show a little effort here, SJ...
The spread between EBITDA and net income is made up of interest expense, income tax expense, and depreciation & amortization.
The spread itself, and the interest expense amount, you're given explicitly. You may need a little help figuring the tax expense, because it's calculated after the deduction for D&A. But you get it started, then check back in if you need a boost with the tax component.