DCF

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

Accounting

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

DCF

How do you calculate beta?

DCF

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

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

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

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?

DCF

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

Enterprise & Equity Values

What is the formula for Enterprise 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 goodwill?

Accounting

How do you calculate Free Cash Flow?

Accounting

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

Merger Model

What is the difference between a merger and an acquisition?

Valuation

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

Accounting

What are deferred tax assets and liabilities?

Valuation

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

LBO

What are the different levers in an LBO?

Accounting

Walk me through the three financial statements

DCF

How do you calculate WACC?

Valuation

What are some problems with using a Precedent Transactions analysis?

Accounting

What is Goodwill Impairment?

Enterprise & Equity Values

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

Enterprise & Equity Values

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

Enterprise & Equity Values

What is the difference between Enterprise Value and Equity Value?

Accounting

What is gross margin?

LBO

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

Valuation

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

Accounting

What is the difference between deferred revenue and accounts receivable?

Accounting

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

Accounting

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

DCF

What happens to WACC as you increase leverage?

Enterprise & Equity Values

What are the four most common valuation multiples?

Accounting

What flows into Retained Earnings?

DCF

How do you calculate cost of equity?

Accounting

What is the difference between goodwill and intangible assets?

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?

DCF

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

Accounting

What are some ways that companies can manipulate their earnings?

DCF

How do you calculate WACC for a private company?

Accounting

How is goodwill calculated?

Merger Model

What are synergies? What kinds of synergies are there?

Accounting

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

DCF

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

Accounting

What is amortization?

Merger Model

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

LBO

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

Accounting

What is working capital?

Accounting

Does Goodwill get amortized?

Accounting

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

DCF

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

Accounting

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

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 are some characteristics that make a good LBO candidate?

Enterprise & Equity Values

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

DCF

How do you determine the discount rate in a DCF?

Enterprise & Equity Values

How do you calculate Fully Diluted Shares Outstanding?

LBO

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

Accounting

How do the 3 financial statements tie together?

Enterprise & Equity Values

Can a company have a negative Enterprise Value? How?

Accounting

What is gross profit?

Valuation

What are some problems with using a Comparable Companies analysis?

Valuation

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

Accounting

What is the relationship between CapEx and Depreciation?

Valuation

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

Valuation

What are the most common valuation multiples?

Merger Model

Walk me through a basic merger model

DCF

Walk me through a DCF

Accounting

What is Operating Margin?

Enterprise & Equity Values

How do you calculate Equity Value?

Enterprise & Equity Values

Why do you subtract cash in the Enterprise Value formula?

Accounting

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

Accounting

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

LBO

What variables impact an LBO the most?

DCF

What is beta?

Enterprise & Equity Values

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

Valuation

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

DCF

How do you calculate terminal value?

DCF

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

Enterprise & Equity Values

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

Merger Model

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

Merger Model

Why does goodwill get created in an acquisition?

Accounting

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

Accounting

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

Enterprise & Equity Values

Why do you add Minority Interest to Enterprise Value?

Valuation

What are the three main valuation methodologies?

LBO

What is a dividend recap?

LBO

What is the circular reference in an LBO?

Merger Model

Why would an acquisition be dilutive?

Accounting

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

Merger Model

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

LBO

Walk me through an LBO

Valuation

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

Accounting

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

Accounting

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

DCF

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