a. Briefly identify the primary differences between EBITDA and EBITDAR.
b. Amazon’s EBITDAR margin is four times that of Costco, but Amazon’s EVA Before Tax Margin is only 270 basis points higher. Identify and explain the factor(s) driving this difference.
c. Which components of a firm’s capital are included in the Productive Capital Charge? Which components of capital are excluded from the Productive Capital Charge?
d. Why is the Productive Capital Charge measured on a pre-tax basis?
e. Amazon’s Working Capital Charge is 0.0% of Sales while Costco’s is 0.2%. Why do you think this is the case?
f. According to Figure 5A.28, line 11, Amazon’s PP&E Charge has risen from 3.1% of sales to 5.5% of sales. Identify and explain the factor(s) driving this change.
g. Amazon’s depreciation rate on Figure 5A.28, line 13, is 19.4%. Costco’s depreciation rate is only 5.1%. Explain why Amazon’s property, plant and equipment are being depreciated at a much faster rate.
h. Observe, summarize and explain the trends in the following metrics for Amazon: