Revenue & Top Line
This is what remains after returns, discounts, and allowances are subtracted from gross revenue
What is Net Revenue?
The three letters that cover selling costs, overhead, and admin salaries on the income statement
What is SG&A?
A company that has lost money in prior years can use this tax asset to offset future taxable income, reducing its cash tax burden
What is an NOL (Net Operating Loss)
A company capitalizes a large portion of its R&D spend each year. Explain how this decision affects operating income, EBITDA, and cash flow differently -- and why a restructuring advisor should care.
Capitalized R&D reduces current OpEx so it inflates operating income and EBITDA, but cash still goes out the door -- FCF is unaffected by the accounting choice, so it overstates true earnings quality and a restatement or policy change could crater reported EBITDA?
A company's stock-based compensation appears in OpEx on the income statement but shows up as an add-back in the cash flow statement. Explain why and where it hits EBITDA.
SBC is a non-cash charge that reduces GAAP operating income but is added back in operating cash flow -- it is also a common Adjusted EBITDA add-back, though it represents real economic dilution to shareholders
A company files Chapter 11 and its revenue drops 30% in the first month post-petition. Name an income statement-specific reasons this happens and what A&M would do to stabilize it.
What is customer attrition and vendor supply disruption cutting into top-line -- A&M would push for critical vendor orders and first day motions to backstop supplier relationships and protect revenue continuity?