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Merger Model
In an all-stock deal, how can you quickly tell if a deal will be accretive or dilutive?
Accounting
What are some ways that companies can manipulate their earnings?
Enterprise & Equity Values
When acquiring a company, should you look at Enterprise or Equity Value?
DCF
What is beta?
Merger Model
Why would a strategic acquirer typically be willing to pay more for a company than a private equity firm?
Valuation
What are some problems with using a Precedent Transactions analysis?
Valuation
What are some problems with using a Comparable Companies analysis?
DCF
How do you determine the discount rate in a DCF?
Accounting
How does a company decide when to capitalize or expense a purchase?
DCF
Which company would we expect to have a higher beta, an industrials company or an internet company?
DCF
What are the formulas for un-levering and levering Beta?
Enterprise & Equity Values
Why do you add Minority Interest to Enterprise Value?
Valuation
What are the three main valuation methodologies?
Enterprise & Equity Values
What is the formula for Enterprise Value?
DCF
Walk me through a DCF
Merger Model
Why does goodwill get created in an acquisition?
Accounting
Why isn't the Income Statement affected by changes in Inventory?
DCF
How do you calculate WACC for a private company?
DCF
Walk me through how to get from Revenue to Unlevered Free Cash Flow in your DCF projections
Accounting
How do you calculate LTM (last twelve months) financials?
Valuation
How would you rank the 3 major valuation methodologies from highest to lowest in expected value?
Accounting
What are some of the major line items on the Cash Flow Statement?
Accounting
What is gross profit?
Merger Model
Walk me through a basic merger model
Valuation
When would you use an LBO analysis as a part of your valuation?
DCF
How do you calculate terminal value?
Accounting
What are deferred tax assets and liabilities?
Enterprise & Equity Values
Is it possible for a company to have a negative Equity Value? How?
DCF
How do you calculate beta?
DCF
What happens to WACC as you increase leverage?
DCF
What is the mid-year convention and why would you use it in a DCF?
DCF
Would you expect the WACC to be higher for a $1 billion or $100 million market cap company?
DCF
Why do you usually project out 5-10 years in a DCF?
Accounting
What happens to the three financial statements if we use PIK interest?
LBO
What is a dividend recap?
Accounting
What are some of the major line items on the Balance Sheet?
Valuation
What is a Sum of the Parts valuation and when would you use it?
DCF
Would you expect the cost of equity to be higher for a $1 billion or $100 million market cap company?
Enterprise & Equity Values
Why is debt added to Equity Value in the formula for Enterprise Value?
DCF
How do you select the appropriate exit multiple when calculating terminal value?
Merger Model
What are some reasons for why a company would want to acquire another company?
LBO
How could a PE firm boost its return in an LBO?
DCF
How do you calculate cost of equity?
Enterprise & Equity Values
Why can't you use Equity Value / EBITDA as a multiple?
Accounting
What is amortization?
Valuation
What is a Liquidation Valuation analysis and when would you use it?
Enterprise & Equity Values
What is the difference between Enterprise Value and Equity Value?
Accounting
A company makes a $100 cash purchase of equipment on Dec. 31. How does this impact the three statements this year and next year?
Accounting
What is goodwill?
Enterprise & Equity Values
Why do you subtract cash in the Enterprise Value formula?
Valuation
What are some other possible valuation methodologies besides the main three?
Enterprise & Equity Values
How do you calculate Fully Diluted Shares Outstanding?
Enterprise & Equity Values
Why do you need to add Minority Interest to Enterprise Value?
Accounting
How is goodwill calculated?
Merger Model
A company with a higher P/E multiple acquires one with a lower P/E multiple. Is this deal accretive or dilutive?
LBO
What variables impact an LBO the most?
Accounting
What flows into Retained Earnings?
Accounting
What is the relationship between CapEx and Depreciation?
LBO
Walk me through an LBO
LBO
What are some characteristics that make a good LBO candidate?
Accounting
Where can you find Depreciation on the Income Statement?
LBO
What is the "tax shield" in an LBO?
Merger Model
Is there a shortcut to determine whether a transaction is accretive or dilutive to shareholders?
Merger Model
Why would an acquisition be dilutive?
LBO
Why do private equity firms use leverage when buying a company?
Accounting
If depreciation is a non-cash expense, why does it affect the cash balance on the Cash Flow Statement?
LBO
Why would a PE firm perform a dividend recap of one of their portfolio companies?
Enterprise & Equity Values
What is the difference between Equity Value and Shareholders' Equity?
Accounting
What's the difference between capital leases and operating leases?
Enterprise & Equity Values
What are the four most common valuation multiples?
LBO
What is the circular reference in an LBO?
Accounting
What is the difference between deferred revenue and accounts receivable?
Accounting
Walk me through the three financial statements
Accounting
What are some of the major line items on the Income Statement?
Accounting
What is the difference between goodwill and intangible assets?
Accounting
What are some examples of non-recurring charges that would be added back to a company's EBITDA?
Accounting
What is Goodwill Impairment?
Enterprise & Equity Values
How do you calculate Equity Value?
Accounting
What is Operating Margin?
Merger Model
What is the difference between a merger and an acquisition?
Accounting
What does it mean if a company has negative Working Capital?
DCF
What happens if you use Levered Free Cash Flow instead of Unlevered Free Cash Flow in your DCF?
DCF
What is a potential issue with basing terminal multiples on current public company multiples?
LBO
What are the different levers in an LBO?
Accounting
Does Goodwill get amortized?
Valuation
How would you present your various valuation methodologies to a client?
Merger Model
What are synergies? What kinds of synergies are there?
Accounting
What is gross margin?
Valuation
What are the most common valuation multiples?
Enterprise & Equity Values
Can a company have a negative Enterprise Value? How?
Accounting
Is it possible to have negative Shareholder's Equity? If so, how?
Enterprise & Equity Values
Should you use the book value or the market value of each item when calculating Enterprise Value?
Accounting
How does $10 of Depreciation affect the three financial statements?
Accounting
Walk me through how $10 of Depreciation affects the three financial statements
Accounting
How does Inventory increasing by $10 affect the three financial statements?
Accounting
What is working capital?
Accounting
How do the 3 financial statements tie together?
Accounting
How do you calculate Free Cash Flow?
DCF
How do you calculate WACC?
Valuation
When would it not make sense to use a DCF in a valuation?
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