Finance (Not IB)
What is the current U.S. Federal Funds Rate?
4.25% to 4.50%
What is EBITDA and why is it important?
Earnings Before Interest, Taxes, Depreciation, and Amortization – used as a proxy for cash flow and a measure of a company's profitability.
What is the 80/20 Rule in consulting?
The Pareto Principle states that 80% of results come from 20% of the efforts.
What does SaaS stand for?
Software as a Service.
What is a KPI in marketing?
A Key Performance Indicator, such as CTR (Click-Through Rate) or ROAS (Return on Ad Spend).
What is the difference between a call option and a put option?
A call option gives the right to buy an asset at a certain price before expiration, while a put option gives the right to sell at a predetermined price before expiration.
How would you value a company?
Common methods include DCF (Discounted Cash Flow), Public Market Comparables, Precedent Transactions, and LBO Analysis.
What are the key components of a market-sizing question?
Population segmentation, penetration rate, frequency of purchase, price per unit.
What is an API?
An Application Programming Interface allows software to communicate and interact with other applications or services.
What is the difference between paid, earned, and owned media?
What is the current U.S. unemployment rate?
4%
Walk me through a DCF valuation.
1. Project free cash flows for 5-10 years.
2. Determine the discount rate (WACC).
3. Calculate the Terminal Value using either the Gordon Growth Model or Exit Multiple Method.
4. Discount all cash flows to present value.
5. Sum them up to get the enterprise value.
A client is experiencing declining profits despite steady revenue growth. What could be some causes?
Rising costs, inefficient operations, supply chain disruptions, pricing pressure, increased competition.
What is Agile methodology?
Agile is an iterative approach to software development that prioritizes flexibility, incremental updates, and collaboration.
Why are engagement metrics (likes, comments, shares) more important than follower count?
They show true audience interaction and brand connection, whereas followers are a vanity metric.
If the yield curve is inverted, what does that typically indicate about the economy?
An inverted yield curve suggests that short-term interest rates are higher than long-term rates, often a sign of an impending recession.
What are the key assumptions in an LBO model?
Leverage (Debt/Equity Ratio), Interest Rate, Entry & Exit Multiples, EBITDA Growth, Revenue Growth, CapEx.
If a client wants to enter a new market, what framework would you use to evaluate this decision?
The Market Entry Framework:
Explain the difference between frontend and backend development.
A company is launching a new product. What are the key elements of a go-to-market strategy?
Target audience, positioning, pricing, distribution channels, promotion strategy.
What are the three primary tools the Federal Reserve uses to control monetary policy?
Open market operations (OMO), the discount rate, and reserve requirements.
How does the impact of a $10 depreciation expense flow through the three financial statements?
Income Statement: Depreciation expense increases by $10, reducing Net Income by $7 (assuming 30% tax).
Cash Flow Statement: Net Income is down by $7, but depreciation is a non-cash expense, so you add back $10, resulting in a net $3 increase in cash flow.
Balance Sheet: Assets decrease by $10 (due to depreciation), but cash increases by $3, so Net Assets fall by $7, balancing the $7 decrease in Retained Earnings.
A retail company with 1,000 stores sees declining foot traffic. What steps would you take to diagnose the issue?
You are a PM at a tech startup launching a new app. What metrics would you track to measure success?
A brand’s social media engagement has dropped significantly. What steps would you take to fix this?