Question

Jake Entertainment Corporation has three segments with revenue, operating income, and depreciation and amortization information (in millions) as follows: Segment Revenue Operating Income Depreciation and Amortization Film $5,000 $1,500 $525 Theme Park 1,000 320 112 Video Game 500 175 53 Totals $6,500 $1,995 $690 The segment with the highest EBITDA as a percent of revenue isA. $432 million
B. $568 million
C. $680 million
D. $792 million

Answer 1

Answer:

Video Games = 35%

Explanation:

As for the provided information, we have:

Operating Income given is exclusive of Depreciation and amortization as operating income do not include so:

Therefore:

EBITDA as percentage of Revenue shall be :

$= \frac{Operating\ Income}{Total\ Revenue} \times 100$

For each segment the calculation shall be:

Film = $\frac{1,500}{5,000}\times 100$ = 30%

Theme Park = $\frac{320}{1,000} \times 100$ = 32%

Video Game = $\frac{175}{500} \times 100$ = 35%

Since the highest percentage is that of video games, it is the most productive.

The options provided do not relate to this question.