Hi guys:
Would anyone mind walking through how they would go about finding the information and breaking down fixed vs variable cost for modeling a company please?
Generally, how does one model a company based on "unit economics"? If someone could walk through an example or point to an online tutorial that shows an example, that would be great!
thanks!
The CIM will say the company had sales of 100, gross profit 50, SG&A 30 and 20 of EBITDA.
The data room will open and as an associate, you will see these numbers again.
You call the banker and say you need COGS detail: materials, fixed labor, variable labor and breakdown of overhead. You also ask for volumes in units or pounds or kg or tons or whatever.
Next, you get a detailed P&L, COGS were 50 but the detail shows: 10 materials (variable), 10 fixed labor, 10 variable labor and 20 overhead. the 20 overhead is 10 of rent and 10 of utilities. You assume that rent and utilities are fixed.
now you have a detailed P&L, and our units were millions of dollars. divide this detailed P&L by units (or pounds) and you have unit economics.
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