Accounting
What are the 3 financial statements?
BS, IS and CSF
A client’s profits are down, but revenue stayed the same. What should you look at first?
Costs — rising expenses could be reducing profit margins.
What does EBITDA stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization.
What is the formula for the Weighted Average Cost of Capital (WACC)?
WACC = (E/V) × Re + (D/V) × Rd × (1 – Tc)
Who is the current chair of the Fed?
Jerome Powell
If a company buys a $10,000 machine using cash, what is the impact on the accounting equation?
No net change. Assets (Cash ↓, Equipment ↑) offset each other.
A new competitor is taking your client’s market share. What’s one strategic option to respond?
Differentiate the product, improve pricing, or enhance marketing to win customers back, etc.
Define a leveraged buyout (LBO).
Acquisition of a company using a significant amount of borrowed money (leverage).
What are the three primary valuation methodologies?
Comparable Companies, Precedent Transactions, and Discounted Cash Flow (DCF).
What is the current Fed short term interest rate?
4.25% to 4.50%
How do you get to EBITDA from Revenue?
Ojas' discretion
How many gas stations are there in the United States?
Rough estimate—150,000
What is it called when private equity firms try to pay themselves(may be especially used if the company isn't doing that well)?
Dividend Recapitalization
What method is used to calculate cost of equity?
CAPM
What percent tariffs have been levied on China
140%
What is the formula for EV(must include all elements)?
Ojas' discretion
How would you estimate the annual revenue of Starbucks in New York City?
Estimate number of stores × average transactions per day × average ticket size × 365 days.
Explain the concept of IRR and how it’s used in private equity.
Internal Rate of Return measures annualized return; used to evaluate investment performance over time.
What type of risk does diversification get rid of?
Idiosyncratic Risk
What did the Trump admin look at to calculate their "reciprocal tariffs"
Trade Deficit
How does $10 of depreciation flow through the 3 financial statements?
Ojas' discretion
How many t-shirts are sold in NYC in a year(No 1/2 t-shirts)
32 mil estimate
What happens to WACC if a firm increases debt in its capital structure?
Initially WACC may decrease due to tax shield, but eventually rises due to higher bankruptcy risk and cost of debt.
What graph illustrates the risk-return rate of a portfolio?
Efficient Frontier or CAL
What 3 firms partnered on a $100 billion venture towards computing infrastructure?
Open AI, Oracle and Softbank