You're an analyst valuing a firm using a discounted cash flow (DCF) model where FCF is calculated based on a forecast EBITDA margin:

FCF = Sales*EBITDAMargin - Taxes - CapEx - DeltaNOWC.

The forecast for the 2021 year shows an EBITDA margin of 20%, which grows to 28% in 2022.

Sales are forecast to grow by 220% over that same year.

Which of the following statements is NOT correct?

An EBITDA margin growing from 20 to 28%:

Select one:

a.Is an improvement.

b.Shows that the expenses deducted from EBITDA are falling as a proportion of sales.

c.Indicates that COGS and operating costs are forecast to rise as a percent of sales.

d.May be due to economies of scale or scope.

e.Is equivalent to EBITDA growing by 348% (=0.28*(1+2.2)/(0.2*1)-1) over the year.