Luther Corporation Consolidated Income Statement
Year ended December 31 (in $millions)
-Refer to the income statement above. Luther's earnings before interest, taxes, depreciation, and amortization (EBITDA)for the year ending December 31, 2005 is closest to ________.
A)$271.8 million
B)$108.7 million
C)$163.1 million
D)$135.9 million

Question

Luther Corporation Consolidated Income Statement
Year ended December 31 (in $millions)  
-Refer to the income statement above. Luther's earnings before interest, taxes, depreciation, and amortization (EBITDA)for the year ending December 31, 2005 is closest to ________.
A)$271.8 million 
B)$108.7 million 
C)$163.1 million 
D)$135.9 million

Quizplus · Accepted Answer

EBITDA is calculated by adding back depreciation and amortization expenses to operating income. From the income statement, we can see that:
Operating income = $108.7 million
Depreciation and amortization = $27.2 million + $21.4 million = $48.6 million
Therefore, EBITDA = Operating income + Depreciation and amortization = $108.7 million + $48.6 million = $157.3 million
Hence, the closest option is D) $135.9 million.