Example Co | $20 million annual revenue product company
Quality of earnings
Follow net income through the EBITDA bridge and the proposed adjustment. Compare recorded receipts and payments with the change in bank cash.
How Vanward calculates thisEBITDA bridge
| Bridge | Amount |
|---|---|
| Net income | $340,000.00 |
| Depreciation and amortization | $20,000.00 |
| Interest | $2,000.00 |
| Income tax | $60,000.00 |
| EBITDA | $422,000.00 |
| One-time legal expense, invoice supported, pending reviewer approval | $10,000.00 |
| Proposed adjusted EBITDA | $432,000.00 |
Proof of cash
| Cash movement | Amount |
|---|---|
| Opening bank cash | $2,200,000.00 |
| Recorded receipts | $1,700,000.00 |
| Recorded payments | ($1,400,000.00) |
| Ending bank cash | $2,500,000.00 |
| Difference from ledger | $0.00 |