Valuation

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

Accounting

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

Accounting

What is the difference between goodwill and intangible assets?

DCF

How do you calculate beta?

LBO

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

Accounting

Walk me through the three financial statements

Valuation

What are some problems with using a Precedent Transactions analysis?

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?

Accounting

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

Merger Model

A company with a higher P/E multiple acquires one with a lower P/E multiple. Is this deal accretive or dilutive?

Accounting

What is the relationship between CapEx and Depreciation?

Accounting

What is working capital?

Valuation

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

Accounting

Where can you find Depreciation on the Income Statement?

DCF

How do you calculate cost of equity?

Valuation

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

Valuation

What are some problems with using a Comparable Companies analysis?

Accounting

What is gross margin?

DCF

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

Accounting

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

Valuation

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

Enterprise & Equity Values

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

Accounting

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

LBO

What is the "tax shield" in an LBO?

LBO

What is the circular reference in an LBO?

Merger Model

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

Accounting

What are deferred tax assets and liabilities?

Accounting

How do the 3 financial statements tie together?

Enterprise & Equity Values

Why do you add Minority Interest to Enterprise Value?

DCF

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

Valuation

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

Enterprise & Equity Values

What are the four most common valuation multiples?

LBO

Walk me through an LBO

Accounting

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

Merger Model

What are synergies? What kinds of synergies are there?

Accounting

What is the difference between deferred revenue and accounts receivable?

Merger Model

Why would an acquisition be dilutive?

Accounting

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

LBO

What variables impact an LBO the most?

Merger Model

Walk me through a basic merger model

DCF

What happens to WACC as you increase leverage?

LBO

What is a dividend recap?

LBO

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

Enterprise & Equity Values

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

Accounting

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

Accounting

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

DCF

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

Enterprise & Equity Values

Can a company have a negative Enterprise Value? How?

Merger Model

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

Accounting

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

DCF

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

Accounting

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

Accounting

What is goodwill?

Merger Model

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

DCF

Walk me through a DCF

Accounting

What flows into Retained Earnings?

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 determine the discount rate in a DCF?

Enterprise & Equity Values

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

Accounting

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

Accounting

Does Goodwill get amortized?

Accounting

How do you calculate Free Cash Flow?

Enterprise & Equity Values

What is the formula for Enterprise Value?

DCF

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

Enterprise & Equity Values

How do you calculate Fully Diluted Shares Outstanding?

DCF

What is beta?

Merger Model

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

Accounting

What is Operating Margin?

DCF

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

Enterprise & Equity Values

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

Accounting

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

Accounting

What is gross profit?

DCF

How do you calculate WACC?

LBO

What are the different levers in an LBO?

Enterprise & Equity Values

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

Enterprise & Equity Values

What is the difference between Enterprise Value and Equity Value?

Accounting

What is Goodwill Impairment?

Valuation

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

DCF

How do you calculate WACC for a private company?

Accounting

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

LBO

What are some characteristics that make a good LBO candidate?

Accounting

How is goodwill calculated?

DCF

How do you calculate terminal value?

Accounting

What is amortization?

Enterprise & Equity Values

How do you calculate Equity Value?

Accounting

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

Enterprise & Equity Values

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

Merger Model

What is the difference between a merger and an acquisition?

Accounting

What are some examples of non-recurring charges that would be added back to a company's EBITDA?

DCF

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

Enterprise & Equity Values

Why do you subtract cash in the Enterprise Value formula?

Valuation

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

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?

DCF

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

LBO

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

Accounting

What are some ways that companies can manipulate their earnings?

Valuation

What are the most common valuation multiples?

Enterprise & Equity Values

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

Valuation

What are the three main valuation methodologies?