Accounting
Is a decrease in accounts receivable a source or use of cash?
Use
What are the two main approaches to valuation and explain them
Intrinsic and Relative Valuation
What's the 10-year treasury yield?
4.56%
How many years would it take to double a $100,000 at a 9% annual return?
Using rule of 72, it would take 8 years (72/9=8)
Everyone take a shot
Good job
What are the three statements and how do they connect?
Give a couple connections
What is the formula for WACC?
(E/(D+E) * Re) + (D/(D+E) * Rd(1-t))
Equity weight * cost of equity + debt weight * cost of debt(1- tax rate)
Whats the S&P500 trading at?
Around 6,130 (be within 30 points)
Everyone take a shot
Good job
Name everyone on leadership and junior leadership, including their positions
President- Adam, PM- Anay, Chairwoman- Inez, JA Dev- Aakash and Jack, Markets- Josh, Marketing- Kate
What is the formula for operating working capital
(Current Assets - Cash) - (Current Liabilities - Debt)
Name two advantages and disadvantages to issuing debt over equity
Advantages: Interest expense is tax-deductible, No ownership dilution/lower cost of capital
Disadvantages: Required interest and principal payments/risk of default, Restrictive debt covenants
What is the current USD/EUR exchange rate
1 USD/0.96 EUR
What’s the difference between a subsidiary and an affiliate company?
Subsidiary - parent company remains majority stakeholder
Affiliate - parent company has only a minority stake
Name every junior in MFIF
Adam, Anay, Inez, Armando, Tobin, Pranav, Stoney, Max, Nico, Diya (10)
DOUBLE JEOPARDY - How does a $10 increase in depreciation affect the three statements assuming a 40% tax rate?
Connecting all three statements
Walk me through a DCF
Forecasts UFCF (Stage 1), Calculate TV (Stage 2) - Growth in perpetuity & Exit multiple, Discount Stage 1 & 2 CFs to PV - Use WACC to discount, Enterprise Value to Equity Value, Subtract net debt and other non-equity claims, Price per Share Calculation, Equity value/diluted shares outstanding
Who were the last 4 FED chairs?
Powell, Yellen, Bernanke, Greenspan
List three ways to boost IRR
Lower purchase price, Raise exit multiple, Increase leverage, Increase company’s growth rate, Increase margins (cut expenses)
What was Pranav's last pitch?
Spirit
What are two ways to calculate EPS and their formulas?
Basic EPS: (Net Income - Dividends on Preferred Stock) / Basic Weighted Average Shares Outstanding
Diluted EPS: (Net Income - Dividends on Preferred Stock) / Diluted Weighted Average Shares Outstanding
DOUBLE JEOPARDY - Two part question: Name the three most common valuation methods. Which of these typically yields the highest valuation and why?
Comparable Company Analysis, DCF Analysis, Comparable Transactions Analysis (Highest yield, control premium)
What type of bond would have the highest convexity and why?
Zero coupon
Suppose Company 1 has a PE of 10, and Company 2 has a PE of 8. In an equity swap deal, is the transaction accretive or dilutive for Company 1 and why?
Accretive
Who was the PM of MFIF for the Spring 2020 semester?
William Steele