Accounting
What are the 3 major financial statements?
Income Statement, Balance Sheet, Cash Flow Statement
What are the 3 major valuation methods?
DCF, Trading Comps, Precedent Transactions
Market Capitalization is equal to _____ (Equity or Enterprise Value).
Equity Value
What is the difference between the primary and secondary market?
Primary is between company and investor, secondary is between investors.
Who is the wealth manager that works with CTC?
Matt Fox
What is the accounting equation?
Assets = Liabilities + Owner's Equity
What are 3 common multiples used in relative valuation?
EV/EBITDA, EV/EBIT, EV/Revenue, P/E, P/BV
If buying a company, do you pay the Enterprise or Equity Value?
Enterprise Value assuming you will pay down debt using cash from the transaction.
What is the current federal funds target rate?
4.25 - 4.50%
Who is on the $5 dollar bill?
Abraham Lincoln
Can you have negative shareholder's equity? Explain why or why not.
Yes, if retained earnings is negative it can make shareholder's equity negative.
What are 3 valuation methods other than the main 3 methods?
LBO, Liquidation Valuation, Sum of the Parts, M&A Premiums Analysis
Can you have an Equity Value greater than the Enterprise Value? Explain why or why not.
Yes, if you have lots of cash on hand and little debt, the net debt can be negative and result in a lower Enterprise Value than Equity Value.
How much has the S&P 500 decreased in the past month (within 1.5%)?
~7.5%
Marc Weinberg recently hosted a famous hedge fund manager to speak to us. What was his name and the name of his hedge fund?
Joel Greenblatt, Gotham Asset Management
Why do you add back non-cash expenses on the cash flow statement?
To reflect the cash savings resulting from non-cash expenses.
What is the formula for the cost of equity (CAPM)?
Cost of Equity = Rf + Beta*(Rm - Rf)
If a company has a P/E of 15, an EPS of $2.00, and 1 million outstanding shares, what is the equity value?
$30M (15*2*1,000,000)
What company did Google recently purchase? How much did they pay?
Wiz, $32B.
What famous investor is known as the "Oracle of Omaha?"
Warren Buffet
How does a $10 increase in depreciation flow through the financial statements with 40% tax rate?
Cash increases by $4, PP&E decreases by $10, Retained Earnings decreases by $6. Opex increases by $10 and net income decreases by $6.
What is the formula to calculate Free Cash Flow (beginning with Revenue)?
Revenue - Opex = EBIT*(1-tax rate) + Non-cash Expenses - Capex - Change in NWC
What is the formula to convert Equity Value to Enterprise Value?
Equity Value + Net Debt + Preferred Stock + Minority Interest
What is quantitative easing/tightening?
A form of monetary policy where the US Central Bank purchases/sells securities to influence the money supply to influence interest rates. Easing is expansionary while tightening is contractionary.
Who was the first U.S. billionaire?
John D. Rockefeller