When preparing a pre-LBO model, the historical income statement is completed until what point? A. Net income B. Interest expenses C. EBIT D. Operating expenses

The historical income statement in a pre-LBO (Leveraged Buyout) model is typically completed until EBIT (Earnings Before Interest and Taxes). So, the correct answer is C. EBIT.

Here's why:

1. Start with revenue: The top of the income statement starts with total revenue or sales.

2. Subtract operating expenses: From revenue, you subtract the cost of goods sold (COGS) and operating expenses to arrive at operating income or EBIT.

3. EBIT is the stopping point: In a

When preparing a pre-Leveraged Buyout (LBO) model, the historical income statement is completed until the point of EBIT (Earnings Before Interest and Taxes).

Here's a step-by-step explanation:

1. Start with the company's revenue: This is the top line or gross income figure from which costs are subtracted to determine net income.

2. Subtract the cost of goods sold (COGS): This gives you the gross profit.

3. Subtract operating expenses: These are costs associated with the day-to-day operations of the business, such as rent, utilities, and salaries.

4. The result is EBIT: This is the income that a company has before paying interest expenses and taxes.

So, the correct answer is C. EBIT.