QoE
What's the most commonly used metric to evaluate a company's core operating performance?
EBITDA
How is net working capital calculated?
Current assets (excluding cash) minus current liabilities (excluding debt)
What is net debt?
Net debt = debt minus cash
Autofit Column Width
Alt H + O + I
DSO Calculation
(Accounts receivable / revenue) * Number of Days
Why is depreciation and amortization added back?
Non-cash expense
Why are cash and debt excluded from net working capital?
In a cash-free, debt-free deal, any debt on the balance sheet is assumed to be paid off at close - often using cash on hand.
Provide three examples of debt-like items
Transaction bonuses, litigation settlements, earnouts, aged AP, deferred revenue (sometimes), deferred income taxes.
Opens the "Paste Special" Menu
Alt + E + S
DPO calculation
(Accounts Payable / expenses) * Number of days
Why are interest (income) / expense added back?
To isolate operating results regardless of a company's capital structure or debt strategy
True or false: If accrued PTO is considered a debt-like item, it should still be included in net working capital.
False - debt-like items are removed from NWC to avoid double-counting in purchase price adjustments.
What is a debt-like item?
A liability that behaves like debt and represents a future cash outflow without post-close benefit.
When you want to copy and paste formatting over from another cell
ALT + E + S + T
An increase in an expense would show as a negative or positive value in an EBITDA Waterfall Bridge
Negative
Why are income taxes added back?
To compare companies on a like-for-like basis by removing differences in tax jurisdiction and entity structures
Does a buyer typically want the closing net working capital to be higher or lower than the agreed peg?
Higher
Why might not all cash be treated as a cash-like item in a transaction?
Some cash may be restricted due to contractual obligations, such as vendor agreements that require the company to maintain a minimum cash balance.
Where to find the "subtotal" menu (description or shortcut)
Data tab -> outline
(alt + a b)
An increase in accounts receivable would show as a __ in a free cash flow analysis
Use of cash, because the company has delivered goods or services but has not yet collected the cash, reducing operating cash flow.
A company experiences significant seasonality around year-end holidays. Which time period is most appropriate for setting the NWC peg: 3-month, 6-month, or 12-month average - and why?
A 12-month average, because it smooths out seasonal fluctuations and avoid biasing the peg with a temporality high or low working capital position.
A deal is structured as a cash-free, debt-free, and normalized working capita. What are the three core components of the purchase price calculation at close?
Purchase price = Enterprise value minus net debt plus or minus the difference between actual NWC and the NWC peg.
Undo for Alex
Ctrl + Zed
In a cash proof analysis, what types of transactions are typically removed?
Transfers/debt proceeds