EBITDA vs PBT Case Study Analysis
This case study analyzes the EBITDA and PBT of a company over multiple financial periods, including turnover, operating profit, taxes, balance sheet data, and EBITDA forecast. It also examines the components contributing to EBITDA valuation and provides insights into financial performance trends and forecasts.
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EBITDA vs PBT A case study
P&L Year ended Period ended Management accounts 11 months to 30 Nov Year ended 31 December Forecast Group profit and loss account 23 Dec 15 31 Dec 16 2017 2018 Draft 2019 20 31 Dec 21 Turnover Cost of sales Gross profit Gross profit % Distribution costs Administrative expenses Other operating income Operating profit Interest payable Exceptional items Profit before tax Tax Profit after tax 20,123,531 (12,005,560) 8,117,971 40.3% (1,153,473) (7,081,590) 34,725,110 (20,786,025) 13,939,085 40.1% (1,585,845) (12,044,882) 40,684,462 (24,039,413) 16,645,049 40.9% (1,772,736) (14,219,124) 49,888,560 (30,127,345) 19,761,215 39.6% (2,236,789) (16,594,560) 94,695 1,024,561 (52,157) 59,028,937 (35,311,148) 23,717,789 40.2% (2,358,170) (20,425,218) 91,781 1,026,182 (147,236) 39,846,262 (20,741,863) 19,104,399 47.9% 44,626,000 (23,875,000) 20,751,000 46.5% (18,626,047) (19,966,000) - - 5,000 658,189 (70,984) (117,092) (51,987) 479,400 310,321 308,358 (67,896) 410,796 651,258 (43,473) 607,785 478,353 (145,909) 785,000 (164,000) - - - - 587,205 (171,486) 415,719 972,404 (315,546) 656,858 878,946 (21,946) 857,000 332,444 621,000 - - 310,321 332,444 621,000
Balance sheets Management accounts including opening balance As at 31 December journals 30 Nov 20 Group balance sheet 2015 2016 2017 2018 2019 - - Goodwill Tangible assets Stocks Debtors Cash at bank and in hand Creditors due in one year Creditors due in over one year Provisions for liabilities Net assets (2,585) 1,971,108 671,270 7,052,706 125,820 (8,500,062) (721,731) 30,304 2,414,335 686,194 5,087,469 1,316,940 (7,659,250) (636,665) (35,016) 1,204,311 1,003,434 8,229,971 751,497 8,475,423 4,677 (13,278,951) (2,049,777) (312,208) 2,824,066 843,334 7,874,042 419,759 5,626,651 3,037,909 (14,509,982) 4,535,183 900,936 6,737,798 1,715 (8,880,483) (1,513,122) (161,996) 1,620,031 6,372,584 616,437 8,677,710 10,629 (11,795,408) (1,287,007) (318,056) 2,276,889 - - (312,208) 2,979,506 596,526 Share capital Profit and loss account 1,000 595,526 596,526 1,000 1,000 1,000 1,000 1,000 1,203,311 1,204,311 1,619,031 1,620,031 2,275,889 2,276,889 2,823,066 2,824,066 2,989,081 2,990,081
EBITDA Forecast year ended 31 Dec Year ended 31 Dec 11 months to 30 Nov EBITDA valuation 2019 2020 2021 Profit before interest and tax Add back: Depreciation and amortisation Directors' remuneration Deduct: Market rate remuneration Deduct profit on sale of assets Notional rent EBITDA Weighting 1,026,182 478,353 785,000 1,045,800 82,272 788,265 77,000 913,382 84,000 (358,000) (53,488) (80,000) 1,662,766 (328,167) (358,000) - - (73,333) 942,118 (80,000) 1,344,382 1 - - 2 1,662,766 2,688,765 Weighted average EBITDA 1,450,510
PBT Calculation of maintainable profit before tax Year ended 31 Dec 11 months to 30 Nov Forecast 2021 2019 2020 Profit before tax Add back: Amortisation Directors' remuneration Deduct: Market rate remuneration Notional rent Adjusted profit before tax Weighting 878,946 332,444 621,000 146,666 82,272 - - 77,000 84,000 (358,000) (80,000) 669,884 (358,000) (80,000) (28,556) (358,000) (80,000) 267,000 1 - - 2 669,884 534,001 Weighted average maintainable profit before tax 401,295
EBITDA: 1,450k PBT: 400k
Surplus assets
Balance sheets Management accounts including opening balance As at 31 December journals 30 Nov 20 Group balance sheet 2015 2016 2017 2018 2019 - - Goodwill Tangible assets Stocks Debtors Cash at bank and in hand Creditors due in one year Creditors due in over one year Provisions for liabilities Net assets (2,585) 1,971,108 671,270 7,052,706 125,820 (8,500,062) (721,731) 30,304 2,414,335 686,194 5,087,469 1,316,940 (7,659,250) (636,665) (35,016) 1,204,311 1,003,434 8,229,971 751,497 8,475,423 4,677 (13,278,951) (2,049,777) (312,208) 2,824,066 843,334 7,874,042 419,759 5,626,651 3,037,909 (14,509,982) 4,535,183 900,936 6,737,798 1,715 (8,880,483) (1,513,122) (161,996) 1,620,031 6,372,584 616,437 8,677,710 10,629 (11,795,408) (1,287,007) (318,056) 2,276,889 - - (312,208) 2,979,506 596,526 Share capital Profit and loss account 1,000 595,526 596,526 1,000 1,000 1,000 1,000 1,000 1,203,311 1,204,311 1,619,031 1,620,031 2,275,889 2,276,889 2,823,066 2,824,066 2,989,081 2,990,081
Balance sheets 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Tangible fixed assets Freehold property Long leasehold Plant and machinery Fixtures, fittings and equipment Motor vehicles - - 1,102,500 315,218 1,729,149 404,352 983,964 4,535,183 1,102,500 623,866 2,746,944 482,064 1,417,210 6,372,584 1,102,500 935,982 3,141,103 856,559 2,193,827 8,229,971 1,102,500 1,013,981 2,936,312 769,204 2,052,045 7,874,042 189,857 1,266,818 336,475 177,958 1,971,108 325,559 1,603,053 373,236 112,487 2,414,335 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Debtors Trade debtors Loan to sister company Directors' loan accounts Prepayments and accrued income 6,271,023 261,834 4,036,796 643,879 4,740,654 1,397,953 5,952,232 1,961,116 93,744 670,618 8,677,710 5,595,778 2,008,796 1,745,609 1,947,977 1,016,889 916,177 5,626,651 - - - - 514,137 7,046,994 406,794 5,087,469 599,191 6,737,798 870,849 8,475,423
Balance sheets 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Tangible fixed assets Freehold property Long leasehold Plant and machinery Fixtures, fittings and equipment Motor vehicles - - 1,102,500 315,218 1,729,149 404,352 983,964 4,535,183 1,102,500 623,866 2,746,944 482,064 1,417,210 6,372,584 1,102,500 935,982 3,141,103 856,559 2,193,827 8,229,971 1,102,500 1,013,981 2,936,312 769,204 2,052,045 7,874,042 189,857 1,266,818 336,475 177,958 1,971,108 325,559 1,603,053 373,236 112,487 2,414,335 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Debtors Trade debtors Loan to sister company Directors' loan accounts Prepayments and accrued income 6,271,023 261,834 4,036,796 643,879 4,740,654 1,397,953 5,952,232 1,961,116 93,744 670,618 8,677,710 5,595,778 2,008,796 1,745,609 1,947,977 1,016,889 916,177 5,626,651 - - - - 514,137 7,046,994 406,794 5,087,469 599,191 6,737,798 870,849 8,475,423
Balance sheets 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Tangible fixed assets Freehold property Long leasehold Plant and machinery Fixtures, fittings and equipment Motor vehicles - - 1,102,500 315,218 1,729,149 404,352 983,964 4,535,183 1,102,500 623,866 2,746,944 482,064 1,417,210 6,372,584 1,102,500 935,982 3,141,103 856,559 2,193,827 8,229,971 1,102,500 1,013,981 2,936,312 769,204 2,052,045 7,874,042 189,857 1,266,818 336,475 177,958 1,971,108 325,559 1,603,053 373,236 112,487 2,414,335 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Debtors Trade debtors Loan to sister company Directors' loan accounts Prepayments and accrued income 6,271,023 261,834 4,036,796 643,879 4,740,654 1,397,953 5,952,232 1,961,116 93,744 670,618 8,677,710 5,595,778 2,008,796 1,745,609 1,947,977 1,016,889 916,177 5,626,651 - - - - 514,137 7,046,994 406,794 5,087,469 599,191 6,737,798 870,849 8,475,423
Balance sheets 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Tangible fixed assets Freehold property Long leasehold Plant and machinery Fixtures, fittings and equipment Motor vehicles - - 1,102,500 315,218 1,729,149 404,352 983,964 4,535,183 1,102,500 623,866 2,746,944 482,064 1,417,210 6,372,584 1,102,500 935,982 3,141,103 856,559 2,193,827 8,229,971 1,102,500 1,013,981 2,936,312 769,204 2,052,045 7,874,042 189,857 1,266,818 336,475 177,958 1,971,108 325,559 1,603,053 373,236 112,487 2,414,335 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Debtors Trade debtors Loan to sister company Directors' loan accounts Prepayments and accrued income 6,271,023 261,834 4,036,796 643,879 4,740,654 1,397,953 5,952,232 1,961,116 93,744 670,618 8,677,710 5,595,778 2,008,796 1,745,609 1,947,977 1,016,889 916,177 5,626,651 - - - - 514,137 7,046,994 406,794 5,087,469 599,191 6,737,798 870,849 8,475,423
Balance sheets 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Tangible fixed assets Freehold property Long leasehold Plant and machinery Fixtures, fittings and equipment Motor vehicles - - 1,102,500 315,218 1,729,149 404,352 983,964 4,535,183 1,102,500 623,866 2,746,944 482,064 1,417,210 6,372,584 1,102,500 935,982 3,141,103 856,559 2,193,827 8,229,971 1,102,500 1,013,981 2,936,312 769,204 2,052,045 7,874,042 189,857 1,266,818 336,475 177,958 1,971,108 325,559 1,603,053 373,236 112,487 2,414,335 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Debtors Trade debtors Loan to sister company Directors' loan accounts Prepayments and accrued income 6,271,023 261,834 4,036,796 643,879 4,740,654 1,397,953 5,952,232 1,961,116 93,744 670,618 8,677,710 5,595,778 2,008,796 1,745,609 1,947,977 1,016,889 916,177 5,626,651 - - - - 514,137 7,046,994 406,794 5,087,469 599,191 6,737,798 870,849 8,475,423
Surplus assets Property: DLA: Sister Company: Total: 1m 1m 2m 4m
Creditors 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in one year Bank loans and overdraft Obligations under finance /HP Other borrowings Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income 498,099 47,801 333,333 3,701,142 441,423 102,460 333,333 3,847,069 8,457 1,526,032 324,490 1,075,986 7,659,250 748,217 126,574 1,294,643 198,563 1,335,746 415,380 500,000 6,419,147 27,932 890,269 838,576 2,851,901 13,278,951 566,459 743,285 844,018 4,833,204 39,549 3,985,910 1,413,810 2,083,748 14,509,982 - - 4,734,961 44,506 696,051 781,724 1,748,450 8,880,483 5,821,336 159,491 1,060,205 904,815 2,356,355 11,795,408 - 1,695,457 552,984 1,671,246 8,500,062 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in over one year Bank loans and overdraft Obligations under finance /HP Other borrowings 97,500 40,898 583,333 721,731 67,500 319,165 250,000 636,665 698,138 342,762 472,222 1,513,122 607,904 540,214 138,889 1,287,007 561,560 750,000 738,217 2,049,777 -
Creditors 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in one year Bank loans and overdraft Obligations under finance /HP Other borrowings Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income 498,099 47,801 333,333 3,701,142 441,423 102,460 333,333 3,847,069 8,457 1,526,032 324,490 1,075,986 7,659,250 748,217 126,574 1,294,643 198,563 1,335,746 415,380 500,000 6,419,147 27,932 890,269 838,576 2,851,901 13,278,951 566,459 743,285 844,018 4,833,204 39,549 3,985,910 1,413,810 2,083,748 14,509,982 - - 4,734,961 44,506 696,051 781,724 1,748,450 8,880,483 5,821,336 159,491 1,060,205 904,815 2,356,355 11,795,408 - 1,695,457 552,984 1,671,246 8,500,062 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in over one year Bank loans and overdraft Obligations under finance /HP Other borrowings 97,500 40,898 583,333 721,731 67,500 319,165 250,000 636,665 698,138 342,762 472,222 1,513,122 607,904 540,214 138,889 1,287,007 561,560 750,000 738,217 2,049,777 -
Creditors 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in one year Bank loans and overdraft Obligations under finance /HP Other borrowings Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income 498,099 47,801 333,333 3,701,142 441,423 102,460 333,333 3,847,069 8,457 1,526,032 324,490 1,075,986 7,659,250 748,217 126,574 1,294,643 198,563 1,335,746 415,380 500,000 6,419,147 27,932 890,269 838,576 2,851,901 13,278,951 566,459 743,285 844,018 4,833,204 39,549 3,985,910 1,413,810 2,083,748 14,509,982 - - 4,734,961 44,506 696,051 781,724 1,748,450 8,880,483 5,821,336 159,491 1,060,205 904,815 2,356,355 11,795,408 - 1,695,457 552,984 1,671,246 8,500,062 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in over one year Bank loans and overdraft Obligations under finance /HP Other borrowings 97,500 40,898 583,333 721,731 67,500 319,165 250,000 636,665 698,138 342,762 472,222 1,513,122 607,904 540,214 138,889 1,287,007 561,560 750,000 738,217 2,049,777 -
Creditors 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in one year Bank loans and overdraft Obligations under finance /HP Other borrowings Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income 498,099 47,801 333,333 3,701,142 441,423 102,460 333,333 3,847,069 8,457 1,526,032 324,490 1,075,986 7,659,250 748,217 126,574 1,294,643 198,563 1,335,746 415,380 500,000 6,419,147 27,932 890,269 838,576 2,851,901 13,278,951 566,459 743,285 844,018 4,833,204 39,549 3,985,910 1,413,810 2,083,748 14,509,982 - - 4,734,961 44,506 696,051 781,724 1,748,450 8,880,483 5,821,336 159,491 1,060,205 904,815 2,356,355 11,795,408 - 1,695,457 552,984 1,671,246 8,500,062 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in over one year Bank loans and overdraft Obligations under finance /HP Other borrowings 97,500 40,898 583,333 721,731 67,500 319,165 250,000 636,665 698,138 342,762 472,222 1,513,122 607,904 540,214 138,889 1,287,007 561,560 750,000 738,217 2,049,777 -
Creditors 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in one year Bank loans and overdraft Obligations under finance /HP Other borrowings Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income 498,099 47,801 333,333 3,701,142 441,423 102,460 333,333 3,847,069 8,457 1,526,032 324,490 1,075,986 7,659,250 748,217 126,574 1,294,643 198,563 1,335,746 415,380 500,000 6,419,147 27,932 890,269 838,576 2,851,901 13,278,951 566,459 743,285 844,018 4,833,204 39,549 3,985,910 1,413,810 2,083,748 14,509,982 - - 4,734,961 44,506 696,051 781,724 1,748,450 8,880,483 5,821,336 159,491 1,060,205 904,815 2,356,355 11,795,408 - 1,695,457 552,984 1,671,246 8,500,062 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in over one year Bank loans and overdraft Obligations under finance /HP Other borrowings 97,500 40,898 583,333 721,731 67,500 319,165 250,000 636,665 698,138 342,762 472,222 1,513,122 607,904 540,214 138,889 1,287,007 561,560 750,000 738,217 2,049,777 -
Cash Management accounts including opening balance As at 31 December journals 30 Nov 20 Group balance sheet 2015 2016 2017 2018 2019 - - Goodwill Tangible assets Stocks Debtors Cash at bank and in hand Creditors due in one year Creditors due in over one year Provisions for liabilities Net assets (2,585) 1,971,108 671,270 7,052,706 125,820 (8,500,062) (721,731) 30,304 2,414,335 686,194 5,087,469 1,316,940 (7,659,250) (636,665) (35,016) 1,204,311 1,003,434 8,229,971 751,497 8,475,423 4,677 (13,278,951) (2,049,777) (312,208) 2,824,066 843,334 7,874,042 419,759 5,626,651 3,037,909 (14,509,982) 4,535,183 900,936 6,737,798 1,715 (8,880,483) (1,513,122) (161,996) 1,620,031 6,372,584 616,437 8,677,710 10,629 (11,795,408) (1,287,007) (318,056) 2,276,889 - - (312,208) 2,979,506 596,526 Share capital Profit and loss account 1,000 595,526 596,526 1,000 1,000 1,000 1,000 1,000 1,203,311 1,204,311 1,619,031 1,620,031 2,275,889 2,276,889 2,823,066 2,824,066 2,989,081 2,990,081
Creditors 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in one year Bank loans and overdraft Obligations under finance /HP Other borrowings Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income 498,099 47,801 333,333 3,701,142 441,423 102,460 333,333 3,847,069 8,457 1,526,032 324,490 1,075,986 7,659,250 748,217 126,574 1,294,643 198,563 1,335,746 415,380 500,000 6,419,147 27,932 890,269 838,576 2,851,901 13,278,951 566,459 743,285 844,018 4,833,204 39,549 3,985,910 1,413,810 2,083,748 14,509,982 - - 4,734,961 44,506 696,051 781,724 1,748,450 8,880,483 5,821,336 159,491 1,060,205 904,815 2,356,355 11,795,408 - 1,695,457 552,984 1,671,246 8,500,062 31 Dec 15 31 Dec 16 31 Dec 17 31 Dec 18 31 Dec 19 30 Nov 20 Creditors due in over one year Bank loans and overdraft Obligations under finance /HP Other borrowings 97,500 40,898 583,333 721,731 67,500 319,165 250,000 636,665 698,138 342,762 472,222 1,513,122 607,904 540,214 138,889 1,287,007 561,560 750,000 738,217 2,049,777 -
Net debt Bank loan: HP: Trade loan: Total: 566k 843k 744k 2.2m
Normalised working capital
Normalised working capital Trade Debtors Stock Trade Creditors Accruals/prepayments
Normalised working capital 31 Dec 18 31 Dec 19 30 Nov 20 Working capital calculation Stocks Cash at bank and in hand Trade debtors Prepayments and accrued income Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income Working capital deficit 616,437 10,629 5,952,232 670,618 (5,821,336) (159,491) (1,060,205) (904,815) (2,356,355) (3,052,286) 751,497 4,677 5,595,778 870,849 (6,419,147) (27,932) (890,269) (838,576) (2,851,901) (3,805,024) 419,759 3,037,909 1,745,609 916,177 (4,833,204) (39,549) (3,985,910) (1,413,810) (2,083,748) (6,236,766) Average 2018 and 2019 3,428,655 Additional working capital deficit (2,808,111)
Normalised working capital 31 Dec 18 31 Dec 19 30 Nov 20 Working capital calculation Stocks Cash at bank and in hand Trade debtors Prepayments and accrued income Trade creditors Corporation tax payable Other taxation and social security Other creditors Accruals and deferred income Working capital deficit 616,437 10,629 5,952,232 670,618 (5,821,336) (159,491) (1,060,205) (904,815) (2,356,355) (3,052,286) 751,497 4,677 5,595,778 870,849 (6,419,147) (27,932) (890,269) (838,576) (2,851,901) (3,805,024) 419,759 3,037,909 1,745,609 916,177 (4,833,204) (39,549) (3,985,910) (1,413,810) (2,083,748) (6,236,766) Average 2018 and 2019 3,428,655 Additional working capital deficit (2,808,111)
Multiples P/E Ratio of Target Target Revenue 5.2 13,812,669 10.8 51,412,000 16.6 18,086,000 52.8 13,362,793 13.0 18,261,000 (1.9) 6,651,702 EV/EBITDA of Target Target A B C D E F Consideration 1,000,000 13,770,000 3,800,000 9,500,000 5,850,000 1,342,604 5.5 7.2 5.3 17.5 6.6 2.5 Median 6.1
Valuation ingredients EBITDA: PBT: Surplus assets: Net debt: Working capital deficiency: Net asset value: 1,450k 400k 4m (2.2m) (2.8m) 3m
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