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