EXHIBIT 2 COMPANY A COMPANY B REVENUES COGS GROSS PROFIT SG&A EXPENSE DEPRECIATION EXPENSE OPERATING INCOME INTEREST EXPENSE INCOME BEFORE TAXES INCOME TAX NET INCOME 23,000 13,000 10,000 2,300 1,550 6,150 950 5,200 1,560 3,640 13,500 9,000 4,500 1,300 2,000 1,200 800 400 160 240 EXHIBIT 3 COMPANY A EBITDA CAP EX 2011 2200 1200 2012 2400 1220 2013 2600 1320 2014 2900 1320 COMPANY B 2011 2012 2000 1220 2200 1200 2013 2300 1320 2014 2900 1320 EBITDA CAP EX EXHIBIT 4 (company A) 2011 2012 2013 EBITDA 875 925 970 EXHIBIT 2 A). Company A and Company B operate in the same industry. Company A is sold for $69,300. Based on this, what is the value of Company B? EXHIBIT 3 B). Both company A and Company B were purchased at the end of 2011 for a 5x EBITDA multiple and financed with $3,000 of debt. Based on the information provided, which company is likely to have a higher equity valuation at the end of 2014. Explain your reasoning, Hint: One of the companies likely paid down more debt, which would increase equity value. EXHIBIT 4 C). Assume that Company A was sold at the end of 2011 for a 5.5x multiple of EBITDA, and the purchase price was financed in part with $3,500 of debt. If the company is sold at the end of 2013 for this same 5.5x multiple, what is the equity return (assuming no debt paydown). D). Make all the same assumptions as you did in #10, but assume that the initial purchase was only financed with $1,000 of debt. What is the equity return in this case assuming no debt paydown