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