Question #2 using the numbers above. Disregard the year 4 projections as they are for the first problem.

Revenues COGS Gross Proft SG&A Operating Income Depreciation EBITDA Debt 515 300 200 100 102 104104 100 30 130 137 148 9 107 30 118 30 30 300 300 Notes: (1) revenue growth in years 2 and 3 is all volume driven (2) COGS in year 1 is 67% variable 1. In the above example (which is the same historical information as the previous problem) assume the biggest risk to this company is customer concentration. Assume one customer accounts for 25% of sales. Assume the company loses this customer. Project revenue, COGS and EBITDA in year 4. Calculate Debt/EBITDA and interest coverage in year 4, 3ooJL.to) 2. Now assume the largest risk to this customer is rising costs that cannot be passed along to the customers. Specifically, assume that the variable component of COGS rises in price by 30% in year 4, Project revenue, COGS and EBITDA in year 4. Calculate Debt/EBITDA and interest coverage in year 4. 229 3% voinin years