Accounting

What are some of the major line items on the Balance Sheet?

DCF

What are the formulas for un-levering and levering Beta?

Enterprise & Equity Values

Why do you add Minority Interest to Enterprise Value?

Enterprise & Equity Values

How do you calculate Fully Diluted Shares Outstanding?

LBO

What is a dividend recap?

Accounting

How does $10 of Depreciation affect the three financial statements?

Enterprise & Equity Values

Why is debt added to Equity Value in the formula for Enterprise Value?

Merger Model

Why would a strategic acquirer typically be willing to pay more for a company than a private equity firm?

Merger Model

Why does goodwill get created in an acquisition?

Valuation

What are the most common valuation multiples?

LBO

What is the circular reference in an LBO?

Valuation

How would you present your various valuation methodologies to a client?

Valuation

How would you rank the 3 major valuation methodologies from highest to lowest in expected value?

DCF

Which company would we expect to have a higher beta, an industrials company or an internet company?

Accounting

What is gross profit?

Accounting

What is gross margin?

DCF

How do you calculate beta?

LBO

What is the "tax shield" in an LBO?

Merger Model

Walk me through a basic merger model

Merger Model

Why would an acquisition be dilutive?

Valuation

When would it not make sense to use a DCF in a valuation?

Valuation

What is a Liquidation Valuation analysis and when would you use it?

DCF

What is beta?

Accounting

What is amortization?

Accounting

What's the difference between capital leases and operating leases?

Enterprise & Equity Values

Should you use the book value or the market value of each item when calculating Enterprise Value?

Valuation

What is a Sum of the Parts valuation and when would you use it?

Enterprise & Equity Values

What is the formula for Enterprise Value?

Merger Model

In an all-stock deal, how can you quickly tell if a deal will be accretive or dilutive?

Enterprise & Equity Values

What is the difference between Equity Value and Shareholders' Equity?

Accounting

Does Goodwill get amortized?

DCF

How do you calculate terminal value?

Enterprise & Equity Values

Why do you subtract cash in the Enterprise Value formula?

Accounting

What is working capital?

LBO

What variables impact an LBO the most?

Enterprise & Equity Values

What is the difference between Enterprise Value and Equity Value?

Accounting

How does a company decide when to capitalize or expense a purchase?

LBO

Walk me through an LBO

DCF

What happens to WACC as you increase leverage?

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 are some of the major line items on the Cash Flow Statement?

Accounting

How do you calculate LTM (last twelve months) financials?

Accounting

Walk me through the three financial statements

Enterprise & Equity Values

What are the four most common valuation multiples?

DCF

How do you select the appropriate exit multiple when calculating terminal value?

Accounting

What are some ways that companies can manipulate their earnings?

Accounting

If depreciation is a non-cash expense, why does it affect the cash balance on the Cash Flow Statement?

Valuation

What are some problems with using a Precedent Transactions analysis?

DCF

How do you calculate WACC?

Accounting

What is the relationship between CapEx and Depreciation?

DCF

Walk me through how to get from Revenue to Unlevered Free Cash Flow in your DCF projections

Accounting

Is it possible to have negative Shareholder's Equity? If so, how?

Accounting

How is goodwill calculated?

Accounting

What is Goodwill Impairment?

Enterprise & Equity Values

Can a company have a negative Enterprise Value? How?

Accounting

How does Inventory increasing by $10 affect the three financial statements?

DCF

What is a potential issue with basing terminal multiples on current public company multiples?

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?

Accounting

How do the 3 financial statements tie together?

DCF

What is the mid-year convention and why would you use it in a DCF?

Enterprise & Equity Values

Why can't you use Equity Value / EBITDA as a multiple?

Accounting

What happens to the three financial statements if we use PIK interest?

DCF

What happens if you use Levered Free Cash Flow instead of Unlevered Free Cash Flow in your DCF?

Valuation

What are the three main valuation methodologies?

Accounting

Why isn't the Income Statement affected by changes in Inventory?

DCF

Why do you usually project out 5-10 years in a DCF?

Accounting

Walk me through how $10 of Depreciation affects the three financial statements

Merger Model

Is there a shortcut to determine whether a transaction is accretive or dilutive to shareholders?

DCF

Would you expect the WACC to be higher for a $1 billion or $100 million market cap company?

LBO

What are some characteristics that make a good LBO candidate?

Valuation

What are some problems with using a Comparable Companies analysis?

LBO

What are the different levers in an LBO?

Merger Model

What are synergies? What kinds of synergies are there?

LBO

Why would a PE firm perform a dividend recap of one of their portfolio companies?

DCF

Walk me through a DCF

DCF

Would you expect the cost of equity to be higher for a $1 billion or $100 million market cap company?

LBO

How could a PE firm boost its return in an LBO?

Enterprise & Equity Values

Is it possible for a company to have a negative Equity Value? How?

Accounting

What are deferred tax assets and liabilities?

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 you use an LBO analysis as a part of your valuation?

Enterprise & Equity Values

When acquiring a company, should you look at Enterprise or Equity Value?

Accounting

What flows into Retained Earnings?

Merger Model

What are some reasons for why a company would want to acquire another company?

Merger Model

What is the difference between a merger and an acquisition?

DCF

How do you calculate WACC for a private company?

Enterprise & Equity Values

How do you calculate Equity Value?

DCF

How do you determine the discount rate in a DCF?

Accounting

What does it mean if a company has negative Working Capital?

Enterprise & Equity Values

Why do you need to add Minority Interest to Enterprise Value?

Accounting

What is the difference between deferred revenue and accounts receivable?

Valuation

What are some other possible valuation methodologies besides the main three?

Accounting

What are some of the major line items on the Income Statement?

LBO

Why do private equity firms use leverage when buying a company?

Accounting

What is Operating Margin?

Accounting

How do you calculate Free Cash Flow?

Accounting

Where can you find Depreciation on the Income Statement?

DCF

How do you calculate cost of equity?