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