While future revenue growth is certainly one of the key considerations when creating a meaningful LBO analysis, there are several other items that must be taken into account to provide a complete financial view of the company under consideration. We have covered the topic of money coming in the door. Now we can consider the money that is going out the door. In other words, we now shift our focus to the topic of expenses.
“We must differentiate between cash and non-cash expenses: raw materials and salaries on the one hand, and depreciation and amortization on the other.”
There are two different types of expenses that we must differentiate between.