Performance MetricTwo companies have the same operational prospect but have a significant difference in their depreciation expense. Which of the following would be the most appropriate metric to compare the cash-operating performance of the two companies?EBITEBITDAVariable marginProfit after tax

Analyse the Performance of a CompanyThe following data is available for two companies A and B:Company A Metric  Previous Year (Amount in $ million)Current Year (Amount in $ million)Sales revenue500 425 Cost of goods sold260 320 Variable Margin240 105 Fixed cost25 25         Company BMetric Previous Year (Amount in $ million)Current Year (Amount in $ million)Sales revenue300 195 Cost of goods sold110 115 Variable Margin190 80 Fixed cost15 15         Based on the given data, which of the following statements is true?Company A has significantly performed better than company B because it has a higher variable margin for the given two years.The absolute variable margins of the two companies are not directly comparable.Company B has a much better operating performance as it has a lower fixed cost than company A.

Which KPI measures the efficiency of cash flow management?Review LaterEarnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)Days Sales Outstanding (DSO)Gross Profit MarginReturn on Investment (ROI)

Shows the financial performance of a firm.Select one:a.Cost of Goods manufacturedb.Income Statementc.Debit Memorandumd.Merchandising

Analyse the Performance of a CompanySuppose you have invested $50,000 each in two pharmaceutical companies – Luvin Limited and Moon Limited – five years ago. Both the companies have the same operational scale. You want to understand the operating performance of the two companies. While browsing the income statement of the two companies, you find the following information: Luvin LimitedMetricAmount (in $)Sales revenue76,000COGS23,000Variable Margin53,000Fixed Cost3,000EBITDA50,000Amortisation10,000EBIT40,000Moon LimitedMetricAmount (in $)Sales revenue71,000COGS14,000Variable Margin57,000Fixed cost4,000EBITDA53,000Amortisation50,000EBIT3,000 Additionally, it is given that Luvin Limited had filed for a patent for ₹2,00,000, 20 years ago and Moon Limited had filed for a patent for ₹10,00,000, 20 years ago. Determine which company’s cash operating performance is better.Note: The patent expense appears as amortisation in the income statement.Luvin Limited Moon Limited

An increase in Depreciation will contribute to higher Cash Flow from Operating Activitiestruefalse