Need help with analysis (calculus, i think)

[lparrish3511]

Hello all, I'm a newcomer here, but I'm trying to do an analysis and am having trouble coming up with an equation/calculation that I feel confident addresses what I need...

Assuming in period one that [ A1 * B1 = C1 ].

during the second period, A1 and B1 have both changed (increased/decreased) to A2 and B2, respectively, so that now [ A2 * B2 = C2 ].

My problem is - how can I quantify how much of the change in C was attributable to both the change in A and the change in B? Said another way, the change in A accounted for, or drove, what percentage of C's change, and the same for B.

Does that make sense?

Thanks in advance for any responses - any help would be greatly appreciated.

Lewis

 

[mathman]

A2=A1 + A, B2=B1 + B
A2B2=A1B1+ A1B + B1A + AB

A1B is change attributed to B, B1A is change attributed to A, AB is change attributed to both. If the A and B changes are relatively small, the AB term may be neglected.

 

[lparrish3511]

Oops, my bad - the formula does, in fact work - I was just applying it incorrectly (the below post was my initial response - to be disregarded)...

Thanks a lot for your help - much appreciated!

Lewis

---------------------------------------

Mathman,

Thanks a lot for your post - it does bring back vague memories of lessons learned back in calculus class, but I'm not sure the equation works for my purpose (due to my lack of info provided).

What I'm trying to do is the following...

A company is often valued based on industry-wide "Multiples" (which is a measure that's reflective of how that sector in the economy is doing) multiplied by "EBITDA" (which is a performance measure for that specific company).

If, in Period 1, the company had the following figures:
Multiple = 4.00x
EBITDA = $2,500
TEV (Total Enterprise Value) = $10,000

In Period 2, the figures were:
Multiple = 6.00x
EBITDA = $2,000
TEV = $12,000

So, the delta between the two periods were:
Multiple: increased 2.00x, or by 50%
EBITDA: decreased $500, or by 20%
TEV: increased by $2,000, or by 20%.

My specific question would be: How much of the TEV increase of $2,000 or 20% is attributable directly to the increase in the multiples between the two periods, and how much of it was impacted (in a negative way) by the company's drop in EBITDA?

I hope that makes a little more sense. Can you (or anyone) think of a formula or equation that I could use to get this?

Again, thanks a lot to all...

 

[mathman]

Using the formulas I gave you:
$5000. increase due to increase in multiple
-$2000. decrease due to decrease in EBITDA
-$1000. decrease from combined affect