BroomWichers Case studies_EBITDA-Solution

Assignment Title Course: Yours Name Professor’s Name University Qn1. Solution Table 1.1 presents calculation for the operating cash flow and free cash flow, and return on investments, by the end of the fifth year (n+5). From the table, Boomwichers will have an operating cash flows of €170M. Creditors will have a net profit of €105M while shareholders will have €65M after servicing the loan and its interest for the five year period. Therefore, it can be surmised that with this investment it is most probable that the creditors will be paid back their loan and the accumulated interest. Whereas, the Boomwichers will still have cash for the shareholders. Qn2. Solution For the calculation EBITDA procedure is used. It represents the variation operating income, revenue charges calculated using the Operating profit + Depreciation, repayment and impairment losses on fixed assets (Vernimmen, at el., 2014). The computation entails the earnings prior to interest, levies, devaluation and amortization expense (Grant & Parker, 2002). To start off, we first tabulate the sum of unit sold using