Three Statements
Why does depreciation boost cash flow?
It’s non-cash but reduces taxable income → lowers cash taxes.
Why do rate hikes typically hurt equities?
Higher discount rates → lower valuation multiples.
Three common valuation methods?
What is Comps, precedents, DCF.
Before its 2008 collapse, this firm was the fourth-largest investment bank
What is Lehman Brothers?
What is the S&P 500 trading at today?
what is 6600
If it could, all else equal,would a company prefer to capitalize or expence?
What is Expense
What does a rising 10-year Treasury yield usually indicate?
What is Higher expected inflation or stronger expected growth.
Why do acquirers sometimes pay above intrinsic value?
Synergies, strategic control, competitive bidding.
In finance slang, the "league tables" refer to this ranking.
What is the ranking of investment banks by deal volume/fees?
What is your personal Beta?
What is Any number between 1 and 2
A company sells equipment for $80 with a book value of $50. Walk through statements.
Gain = 30 → NI ↑ (after tax), subtract gain in CFO, add back book value loss, CFI +80.
If the exchange rate of the US Dollar strengthens significantly, this is the general impact on the earnings of US multinationals with heavy overseas revenue.
What is "They decrease"? (Foreign revenue translates to fewer dollars)
In an all stock acquisition, how do we figure out if the deal is accretive or dillutive?
What is if the target's P/E is lower than the acquirers P/E (then accretive)
What year was Black Monday?
What is 1987 (S&P down 22% in one day)
If I gave you an offer right now on the spot would you take it?
What is show me the dotted line and Ill sign
In an M&A deal, if you write up the value of an asset, you create this corresponding liability on the Balance Sheet to account for future tax discrepancies
What is a Deferred Tax Liability (DTL)?
Of the main indices this one is "price-weighted," meaning a stock split fundamentally changes the index calculation.
What is the Dow Jones Industrial Average?
Why does a "Dividend Recap" not affect Enterprise Value?
What is Because you are trading Equity Value for Debt (Equity down, Debt up), but the core operating value of the business hasn't changed
Why was LIBOR replaced?
What is Manipulation scandals → switch to SOFR.
Name one recent deal and the bank that advised on it
What is ___ (just pay attention to who advised on deals as well)
A form of debt payment that does not require cash outlay, but instead increases the principal balance of the debt; it must be added back on the Cash Flow Statement.
What is PIK (Payment in Kind) Interest
This market condition exists in futures markets when the futures price is higher than the spot price, implying a cost of carry.
at is Contango? (Opposite is Backwardation).
LBO: what is MOIC of following:what is MOIC
MOICm
Company buys a target for 10x EBITDA; EBITDA = $30m; 60% debt @ 8%; 5-year hold; EBITDA grows 5%; exit at 10x.
Entry EV = 300; Debt = 180; Equity = 120.
Exit EBITDA ≈ 38; EV ≈ 380; Debt unchanged = 180 → Equity ≈ 200
moic = 1.67
This specific 1933 Act separated commercial and investment banking; its repeal in 1999 is often cited as a cause of the 2008 crisis.
What is Glass-Steagall
How many trees are in Canada?
What is 318 billion? (Thought process matters more + be within an order of magnitude)