What is the gross margin as a % of sales? Why is this important to the entrepreneur and the investor? What is the EBITDA? Why is this important? What is the interest coverage ratio?

Given the following information please construct a balance sheet and an income statement for the company. It provides software via a cloud subscription. There is no inventory.

All information in $000

Total Revenues 5,374

Cash 908

Common Stock 651

Cost of Revenues Subscription 925

Interest Expense 16

Additional Paid in Capital 3,954

Retained Earnings (630)

Cost of Revenues Professional Services 365

Gross Margin 4,084

Short term securities 87

Long term debt 2,328

Accounts Receivable 1,906

Accounts Payable 1,103

Research & Development 793

Marketing & Sales 2,757

Other current liabilities 3,287

Other current assets 649

Investment income 10

General & Administrative Expense 680

Depreciation 448

Property & Equipment 1,126

Goodwill 3,783

Other long term assets 2,234

Total Current Assets 3,550

Total Operating Income (146)

Net Loss (600)

Total assets 10,693

• What is the gross margin as a % of sales? Why is this important to the entrepreneur and the investor?
• What is the EBITDA? Why is this important?
• What is the interest coverage ratio? (EBITDA / Interest expense) Why is this important?
• What is the current ratio? (Current assets / current liabilities) Why is this important to the investor and the entrepreneur?