Simone is a staff accountant for a local factory, and she has been asked to gather data and perform some analysis by the end of the week for the annual financial performance evaluation. She compiled the following information: Assume that expenses do not include depreciation, amortization, or interest. What is the difference between earnings before interest, taxes, depreciation, and amortization (EBITDA) for Years 1 and 2?
A) $36,490 increase
B) $51,490 decrease
C) $54,506 decrease
D) $74,010 increase

Question

Simone is a staff accountant for a local factory, and she has been asked to gather data and perform some analysis by the end of the week for the annual financial performance evaluation. She compiled the following information:  Assume that expenses do not include depreciation, amortization, or interest. What is the difference between earnings before interest, taxes, depreciation, and amortization (EBITDA) for Years 1 and 2?
A) $36,490 increase 
B) $51,490 decrease 
C) $54,506 decrease 
D) $74,010 increase

Quizplus · Accepted Answer

This question requires familiarity with the calculation of EBITDA: Sales - Expenses (excluding certain items). EBITDA, Year 1 = $1,256,002 - $883,458 = $372,544. EBITDA, Year 2 = $1,439,754 - $993,200 = $446,554. The difference is ($446,554 - $372,544) = $74,010 Increase (Choice D).

Simone Is a Staff Accountant for a Local Factory, and She