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Accounting
Enterprise Value vs Equity Value
Valuation Methodologies
Discounted Cash Flow
Mergers & Acquisitions
Leveraged Buyouts
Markets & Why Banking
Brain Teasers & Mental Math
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80 questions
easy
Walk me through the three financial statements.
easy
What is the difference between a flow statement and a stock statement?
easy
What is the difference between an expense and a cash outflow?
easy
Why does the balance sheet balance?
easy
What is the difference between COGS and operating expenses?
easy
What is goodwill and when is it created?
easy
What is working capital and why does it matter?
easy
What are the three sections of the cash flow statement?
easy
What's the difference between accrual accounting and cash accounting?
easy
How do you calculate net income?
easy
How does net income flow into retained earnings?
easy
What is deferred revenue?
easy
What is the difference between equity value and enterprise value?
easy
Write out the bridge from equity value to enterprise value.
easy
Why do you use diluted shares rather than basic shares when calculating equity value?
easy
Is market capitalisation the same thing as equity value?
easy
Should accounts payable be added to debt when calculating enterprise value?
easy
What is preferred stock and why is it added in the enterprise value bridge?
easy
List the items that count as 'debt' when building the enterprise value bridge.
easy
At what ownership stake does a parent fully consolidate a subsidiary?
easy
What is the equity method of accounting?
easy
What is minority interest (non-controlling interest)?
easy
What is net debt?
easy
What is the treasury stock method in one sentence?
medium
If depreciation goes up by $10 and the tax rate is 40%, walk me through the three statements.
medium
Which of the three financial statements would you pick if you could only have one, and why?
medium
If inventory goes up by $100 using cash, walk me through the three statements.
medium
If accounts receivable goes up by $10 and the tax rate is 40%, walk me through the three statements.
medium
If accounts payable goes up by $10, walk me through the three statements.
medium
A customer prepays $100 for a service you haven't delivered. Walk me through the three statements.
medium
A company pays a $20 cash dividend. Walk me through the three statements.
medium
A company accrues $10 of wages that will be paid next period. Tax rate is 40%. Walk me through the three statements.
medium
A company writes down $30 of inventory. Tax rate is 40%. Walk me through the three statements.
medium
A company issues $50 of stock-based compensation. Tax rate is 40%. Walk me through the three statements.
medium
A company records a $40 goodwill impairment. Assume it's non-tax-deductible. Walk me through the three statements.
medium
A customer pays $50 of outstanding AR. Walk me through the three statements.
medium
A company sells equipment with a $60 book value for $80 cash. Tax rate is 40%. Walk me through the three statements.
medium
Why is depreciation added back on the cash flow statement?
medium
Give me an example of a company with positive net income but negative cash flow from operations.
medium
What is the cash conversion cycle?
medium
What's the difference between accounts payable and accrued expenses?
medium
What is a deferred tax liability and how does it arise?
medium
What is a deferred tax asset and how does it arise?
medium
What is a valuation allowance on a DTA?
medium
Why is an increase in inventory a use of cash?
medium
Why do you subtract cash when calculating enterprise value?
medium
Why do you add minority interest when calculating enterprise value?
medium
Why does EV/EBITDA use enterprise value but P/E uses equity value?
medium
A company issues $100 of debt and holds the proceeds as cash on the balance sheet. What happens to enterprise value?
medium
A company uses $100 of cash to repay $100 of debt. What happens to enterprise value and equity value?
medium
A company pays a $40 cash dividend. What happens to enterprise value and equity value?
medium
A company issues $50 of new stock at fair market value. What happens to enterprise value?
medium
A company uses $100 of cash to buy a factory worth $100. What happens to enterprise value?
medium
A company has 100m basic shares at $50 and 10m options with a $30 strike. Walk me through diluted shares using the treasury stock method.
medium
Do you use book value or market value of debt in the enterprise value bridge?
medium
How do you treat convertible bonds in the enterprise value bridge?
medium
Should operating lease liabilities be added to enterprise value under IFRS 16 / ASC 842?
medium
What is restricted cash and should you subtract it from enterprise value?
medium
What's the difference between total cash and excess cash, and which do you use in the enterprise value bridge?
medium
Why is P/EBITDA a meaningless multiple?
medium
Why is Enterprise Value / Net Income (EV/Net Income) a meaningless multiple?
medium
Why is an equity method investment NOT added to enterprise value, unlike minority interest?
medium
A company owns 40% of an associate. The associate earns $100 of net income. What hits the parent's income statement and balance sheet?
medium
A parent owns 70% of a subsidiary. The subsidiary earns $100 of net income. How does that flow through the parent's income statement?
medium
Paying down debt with cash is supposed to leave enterprise value unchanged but raise equity value — can you explain?
hard
A company buys a $100 machine with $50 cash and $50 debt. Walk me through the three statements on day one.
hard
A company buys $100 of inventory on credit, then sells it for $150 cash. Tax rate is 40%. Walk me through the three statements for both transactions combined.
hard
Company A acquires Company B for $150 cash. Company B's net identifiable assets are worth $100 at fair value. Walk me through Company A's balance sheet on day one.
hard
A company has $200 of NOLs and earns $100 of pre-tax income in the current year. Tax rate is 40%. Walk me through the impact on the three statements this year.
hard
Company A acquires 70% of Company B for $70 cash. Company B's net assets are worth $100. Walk me through the consolidation on day one.
hard
A company takes out $200 of debt at 10% interest and immediately spends $200 on PP&E with a 10-year useful life. Walk me through year one impact on the three statements. Tax rate 40%.
hard
A company writes down PP&E by $100 (non-cash). It then borrows $50 to pay a $50 dividend in the same period. Tax rate 40%, write-down tax-deductible. Walk me through the three statements combined.
hard
A company has a $1bn market cap, $300m of debt, $50m of minority interest, and $100m of cash. What is its enterprise value?
hard
A DCF produces an enterprise value of $1,200m. The company has $300m of debt, $100m of cash, $50m of minority interest, and 20m diluted shares. What's the implied share price?
hard
A company has $200m of convertible bonds with a $20 strike price. The stock is trading at $40. The company has 50m basic shares outstanding. Walk me through how to treat the converts.
hard
Company A has an enterprise value of $1,000m. It acquires Company B (enterprise value $400m) for $400m of cash. Assume no synergies. What is the combined enterprise value the day after the deal closes?
hard
A company takes a $100m goodwill impairment (non-tax-deductible). What happens to equity value and enterprise value?
hard
A company's ownership in an associate goes from 30% to 60% via open-market share purchases. What changes in the accounting?
hard
A company has a $1bn market cap, $200m of debt, and $400m of cash. Net debt is negative $200m. What does that imply about enterprise value, and what should you watch out for?
hard
A company has $500m of equity value, $100m debt, $50m cash, $30m minority interest, and $40m of equity method investments in associates. What's the company's 'clean' operating enterprise value?
