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Enterprise Value vs Equity Value Questions
The bridge, what's in and out, and the edge cases interviewers love to ask about.
All topics
Accounting
Enterprise Value vs Equity Value
Valuation Methodologies
Discounted Cash Flow
Mergers & Acquisitions
Leveraged Buyouts
Markets & Why Banking
Brain Teasers & Mental Math
Fit & Behavioural
all
easy
medium
hard
40 questions
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
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 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?
