Accounting
Corp Fin
TVM
DCF
Misc
100
What are the three statements and how do they link together?
Income statement, Statement of Cash Flows, Balance Sheet. NI goes to CFS and RE, Cash from CFS goes to BS.
100
What is the capital structure comprised of? Can you walk me through the waterfall?
Debt and Equity; Revolver, Term Loans, Sr. Secured, Unsecured, Mezz debt, preferred shares, common stock
100
What is the difference between an annuity and perpetuity?
A perpetuity is an annuity that continues on forever.
100
Why do we project out 5-7 years?
We have to reach a state of steady/stable cash flows.
100
Why is Jason happy all the time?
He spends all day looking at MODELS!
200
If a company buys $100 of Equipment, how is Net Income changed? How is Cash changed?
Net Income is unchanged, Cash is down $100
200
What is the formula for enterprise value? What does it represent?
Equity + Debt + Preferred Shares + Non-Controlling Interest - Cash. Represents the total operational value of a firm.
200
Why is the value of a dollar today worth more than one tomorrow?
Inflation and Opportunity Cost. Money today can be invested and earn a return for tomorrow.
200
What would have a higher WACC, a new start up or an established company?
The new start up.
200
What is the difference between levered and unlevered beta.
Levered takes into account the capital structure of the firm.
300
What is DPO, DSO, and DIH. Why do we find these? Bonus points if you can name the formulas.
DPO - Days Payables Outstanding; DSO - Days Sales Outstanding; DIH - Days Inventory Outstanding
300
What is a residual claimant?
the person or entity that receives the remaining funds after all other claims on an organization's resources have been paid (think equity holders in a bankruptcy).
300
What is the discount rate we use in a DCF? Bonus points if you can explain what the rate means conceptually.
WACC. It represents the required return from the company's various stakeholders.
300
What is the wacc for a company with no debt?
cost of equity and/or cost of preferred stock. Bonus points for the formula for finding cost of equity.
300
What type of bank is Greenhill (bulge bracket, boutique, middle market)?
Middle Market
400
If we sell $50 of inventory for $100 on account, walk me through the three statements. (20% tax)
EBT up 50, NI up 40, CFS subtract 100 AR increase, add 50 Inv decrease. Cash down 10. Inv down 50, AR up 100, RE up 40.
400
Can Equity Value be negative? What about shareholder's equity? What's the difference between the two?
No (cannot have negative share price or outstanding shares). Yes (when liabilities are greater than assets). Equity - Market Value SE - Book Value
400
How many years will it take an investment to double in value with a 1% growth rate? What about triple?
72 years; 114 Years
400
What the two terminal value methods and how do you find them?
Exit multiple method and perpetuity growth method. Exit method found using comps; perpetuity growth is a hardcoded percentage.
400
What is the motto of the IBW?
Happy, Humble and Kind
500
A company bought $100 of equipment 1 year ago. This year they depreciated 10% of it, had income of 50 all on account, Accounts payable increased by 75 They also had capex of 60 and raised debt of 25. What is net change in cash. Assume (25% tax rate).
DA up 10, income 50, Pre-tax income of 40. NI 30. Add 10 DA, Add AP 75, Subtract 50 AR, Subtract capex 60, add debt 25. Ending Cash up 30.
500
A company with an EV of 2000 and no non-operational cash 1. raises 1000 of debt. 2. Spends 500 on a factory. 3. fraud is detected, and the remaining cash is found to have been stolen. How does EV change throughout all three scenarios?
1. EV = 2000; 2. EV = 2,500; 3. EV = 3,000
500
How would you discount Jason Nemirov?
Best Answer Wins.
500
Market value of equity is 1000, Book value of equity is 1500. Book Value of Debt is 3000, and is trading at $1 per dollar of book value. Equity holders demand a 8% return and debt holders demand a 4% return. What is WACC. Assume (0% tax rate).
WACC is 5%
500
What is the name of Sameer's dog.
Waffles