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

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stokholm stokholm · Answer 1 · 2019-10-18T09:02:17+02:00

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 :

[tex]= \frac{Operating\ Income}{Total\ Revenue} \times 100[/tex]

For each segment the calculation shall be:

Film = [tex]\frac{1,500}{5,000}\times 100[/tex] = 30%

Theme Park = [tex]\frac{320}{1,000} \times 100[/tex] = 32%

Video Game = [tex]\frac{175}{500} \times 100[/tex] = 35%

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

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