Skip to main content
ECOMCAAccounting · Tax · Advisory
Menu
WhatsApp UsContact us

QoE & EBITDA Bridge Calculator

See how a due-diligence review restates your GMV and P&L into net revenue, normalised EBITDA and value.

Reviewed by CA Apurav GargUpdated Calculated in your browser; copied links include your figures

On this page

Calculator

Note:
Example values — replace with yours.

Top line for the year (incl. GST)

Orders dispatched in March that return in April without a year-end provision.

Returned goods come back as sellable stock, so only the margin is lost, not the whole sale. Turn off to deduct the full revenue.

Presets are today’s common rates. Use “Custom rate” for any other rate, including special rates and rates for earlier periods.

Reported costs (excl. GST)

Diligence adjustments (excl. GST)

For example MSME 45-day interest, unreversed blocked ITC or short-deducted TDS.

Unbooked platform fees, short settlements or debit notes found in diligence. Blank or 0 if none.

Advanced options
Input GST on stock written off has to be reversed. Uses the GST rate above on the write-down.

Unpaid GST or TDS mismatches, tax exposure on late MSME payments, gratuity: deducted in full from equity value.

Indicative multiples

Your own assumption. Leave blank to skip.

Your own assumption. Leave blank to skip.

Your result

Normalised EBITDA

₹73,62,182

Reported EBITDA of ₹1,13,55,932 (14.0% margin) becomes ₹73,62,182 (9.4%) after the diligence adjustments.

Adjusted net revenue
₹7,83,55,932
Net EBITDA adjustment
−₹39,93,750
Revenue overstated by
3.7%
From reported to normalised EBITDA
Reported EBITDA₹1,13,55,932Return cut-off, net of product cost−₹18,93,750Inventory write-down−₹18,00,000Unrecorded accruals−₹15,00,000One-off add-backs+₹12,00,000Normalised EBITDA₹73,62,182

Running totalDeduction

Return cut-off and gross margin
Ind AS 115 / AS 9₹ for the year
Revenue overstatement (cut-off returns, excl. GST)−₹30,00,000
Product cost of the returns, back in stock+₹11,06,250
Net EBITDA impact of the cut-off−₹18,93,750

The returned goods are product cost back in stock: COGS × overstatement ÷ reported net revenue.

Reported vs diligence-adjusted
For the yearReportedAdjustedChange
Net revenue₹8,13,55,932₹7,83,55,932−₹30,00,000
EBITDA₹1,13,55,932₹73,62,182−₹39,93,750
EBITDA margin14.0%9.4%−4.6%
Value at 2.5× net revenue₹20,33,89,831₹19,58,89,831−₹75,00,000
Value at 12× EBITDA₹13,62,71,186₹8,83,46,186−₹4,79,25,000

Values use the multiples you enter, as an illustration of how an adjustment carries into a valuation discussion. They are not a valuation.

Enterprise value to equity value
Diligence bridge₹
Enterprise value change (−₹39,93,750 × 12×)−₹4,79,25,000
Less debt-like statutory and MSME liabilities₹0
Change in equity value−₹4,79,25,000

The EBITDA adjustment changes enterprise value at the multiple; debt-like items come off equity value one for one.

What this tells you

An investor’s due-diligence team does not take reported GMV or EBITDA as given. It removes GST and discounts, provides for returns that arrive after the year end, writes down stock that cannot be sold and books liabilities the accounts have missed.

Enter your year’s figures to see the diligence-adjusted net revenue and normalised EBITDA, and how each adjustment carries into a value at the multiples you choose.

Assumptions used

  • All figures are for one financial year. Top-line figures include GST; costs and adjustments exclude it.
  • One blended output GST rate is applied to all revenue.
  • Each adjustment is entered once, as an amount for the year; the tool does not check whether it would be accepted in a review.
  • Multiples are your own illustration and are applied to the reported and adjusted figures alike.
  • The calculator opens with the product cost of cut-off returns credited back (Ind AS 115 / AS 9: the returned goods are recognised back in stock). This is an illustrative default; turn it off to deduct the full revenue.
  • The GST reversal on written-off stock uses the blended GST rate on the write-down, as an estimate of the input GST claimed on it.
  • Debt-like liabilities are deducted from equity value one for one, not at the multiple.
  • Figures are rounded for display only; the working uses exact values.

How this is calculated

  1. Value after discounts and returns (incl. GST) = GMV − discounts included in GMV − returns and RTOs.
  2. Reported net revenue = that value ÷ (1 + GST rate). Adjusted net revenue = (that value − year-end return cut-off) ÷ (1 + GST rate).
  3. Revenue overstatement = reported − adjusted net revenue, also shown as a % of reported net revenue.
  4. Reported EBITDA = reported net revenue − COGS − fulfilment, fees and marketing − fixed operating expenses.
  5. Product cost back in stock (if credited back) = revenue overstatement × COGS ÷ reported net revenue. Net cut-off impact = overstatement − that product cost.
  6. GST reversed on written-off stock (if added) = stock write-down × GST rate.
  7. Net EBITDA adjustment = − net cut-off impact − stock write-down − GST reversed − unrecorded accruals − unreconciled platform deductions + one-off add-backs. Normalised EBITDA = reported EBITDA + the net adjustment.
  8. Value = net revenue × revenue multiple, and EBITDA × EBITDA multiple, for reported and adjusted figures; the change is adjusted − reported.
  9. Change in equity value = net EBITDA adjustment × EBITDA multiple − debt-like statutory and MSME liabilities.

Terms used here

Worked examples

Example 1: ₹12,00,00,000 of reported GMV, full revenue deducted for the cut-off

Discounts ₹60,00,000, returns and RTOs ₹1,80,00,000, an unprovided March cut-off of ₹35,40,000, GST 18%.

  • Net revenue ₹8,13,55,932.20 reported, ₹7,83,55,932.20 adjusted: overstated by ₹30,00,000.00 (3.7%).
  • Reported EBITDA ₹1,13,55,932.20 (14.0%). Net adjustment −₹51,00,000.00: stock ₹18,00,000, accruals ₹15,00,000, add-backs ₹12,00,000.
  • Normalised EBITDA ₹62,55,932.20 (8.0%).
  • At 2.5× net revenue: ₹20,33,89,830.51 → ₹19,58,89,830.51 (−₹75,00,000.00).
  • At 12× EBITDA: ₹13,62,71,186.44 → ₹7,50,71,186.44 (−₹6,12,00,000.00).

Example 2: the same business, with the product cost of the returns credited back

As Example 1, but with COGS of ₹2,80,00,000 and the returned goods counted back in stock.

  • Product cost back in stock: ₹30,00,000 × ₹2,80,00,000.00 ÷ ₹8,13,55,932.20 = ₹10,32,500.00.
  • Net cut-off impact: ₹30,00,000.00 − ₹10,32,500.00 = ₹19,67,500.00.
  • Net EBITDA adjustment: −₹19,67,500 − ₹18,00,000 − ₹15,00,000 + ₹12,00,000 = −₹40,67,500.00.
  • At 12× EBITDA, that keeps ₹1,23,90,000 of value compared with deducting the full revenue.

Our Due Diligence & Valuation work covers data-room preparation, quality of earnings and vendor due diligence.

Questions sellers ask

What is a quality of earnings (QoE) review?

Part of financial due diligence. The reviewer rebuilds revenue and EBITDA from the underlying records, removes items that will not recur, and adds costs or provisions the books have missed, so the investor or lender sees earnings that can be relied on.

Why does GMV differ so much from net revenue?

GMV is the value of orders placed, including GST. Net revenue removes discounts already given, orders returned or not delivered (RTO), and the GST collected for the government. For a marketplace-heavy D2C brand the gap is often large.

What is a year-end return cut-off?

Orders dispatched before the year end can come back after it. If no provision is made for those expected returns, the year’s revenue includes sales that will reverse. A review deducts the expected returns from the year in which the sale was booked.

Which costs are usually added back?

Costs that will not continue after the transaction: a one-time legal or fundraising fee, an office move, or personal expenses booked in the company. Each add-back needs support; a reviewer will not accept an add-back just because it is large.

Are the multiples a valuation?

No. They are your own assumption, used only to show how a change in revenue or EBITDA carries into an enterprise value at the same multiple. An actual valuation depends on growth, margins, comparable deals and the terms negotiated.

Want our team to look at these numbers alongside your books?

We keep books, file GST and TDS returns and prepare monthly MIS for D2C and marketplace sellers. Share your figures and we will walk you through what we find.

Contact usWhatsApp us

Related

Disclaimer

An estimate for general information only, based on the figures you enter. It is not a quality of earnings report, a valuation or professional advice, and the multiples are an illustration, not an opinion of value.

Report a problem with this calculator