Series 79 topic

Collection, Analysis & Evaluation of Data: 139 free Series 79 practice questions

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Which of the following financial statements reports a company's revenues and expenses over a specific period of time?easy
A company reports total assets of $500 million and total liabilities of $300 million. What is the company's total stockholders' equity?easy
An investment banker is reviewing a company's cash flow statement and notices that operating cash flow is significantly higher than net…medium
A company has revenue of $120 million, cost of goods sold of $72 million, SG&A expenses of $18 million, and depreciation of $6 million.…medium
An investment banker is analyzing two potential acquisition targets. Company A has an EBITDA margin of 25% on $400 million in revenue but…hard
On the statement of cash flows, the purchase of property, plant, and equipment (PP&E) is classified under which section?easy
An analyst discovers that a company's days sales outstanding (DSO) has increased from 35 days to 55 days over the past two years. What does…medium
An investment banker is preparing an analysis for a sell-side mandate. The target company capitalizes a significant portion of its software…hard
Which of the following working capital changes would result in a source of cash on the cash flow statement?medium
In a discounted cash flow (DCF) analysis, which of the following best describes the purpose of the discount rate?easy
An investment banker is building a DCF model for a client. The company's projected unlevered free cash flow for Year 1 is $50 million, and…medium
In a DCF analysis, unlevered free cash flow (UFCF) is calculated as EBIT(1-t) + D&A - CapEx - Change in Net Working Capital. Why is UFCF…medium
An analyst builds a 5-year DCF model with projected free cash flows of $20M, $22M, $25M, $28M, and $30M. The terminal value at the end of…hard
Which of the following is a key limitation of the DCF valuation methodology?medium
In a DCF analysis, what time period do the projected cash flows typically cover before a terminal value is calculated?easy
An investment banker is performing a DCF on a cyclical industrial company currently at peak earnings. Which of the following adjustments…hard
Which cash flow measure is most commonly discounted in an enterprise DCF model?medium
In a comparable company analysis, what is the primary purpose of selecting peer companies?easy
An investment banker selects five comparable companies with EV/EBITDA multiples of 8.0x, 9.5x, 10.2x, 11.0x, and 14.5x. The target company…medium
When conducting a comparable company analysis, which of the following criteria is LEAST important in selecting peer companies?medium
An analyst notices that one comparable company trades at an EV/EBITDA multiple significantly above its peers. Upon investigation, the…hard
Which of the following is the most commonly used enterprise value multiple in comparable company analysis?easy
An investment banker is valuing a SaaS company with no positive EBITDA. Which valuation multiple would be most appropriate for the…medium
An analyst is building a comparable company analysis and must choose between using LTM (last twelve months) and NTM (next twelve months)…hard
In a comparable company analysis, calendarization is performed to:medium
What is the primary difference between a comparable company analysis and a precedent transaction analysis?easy
An investment banker is conducting a precedent transaction analysis for a mid-cap healthcare company. Which of the following factors is…medium
An analyst identifies five precedent transactions with EV/EBITDA multiples of 12.0x, 13.5x, 11.0x, 15.0x, and 9.5x. The 15.0x transaction…hard
In a precedent transaction analysis, which financial metric is most commonly used as the basis for the transaction multiple?medium
A precedent transaction analysis for a technology target reveals the following transaction EV/Revenue multiples: 3.2x, 4.1x, 3.8x, and…medium
Precedent transaction analysis is also commonly known as:easy
Which of the following is the correct formula for enterprise value?easy
A company has a share price of $40, 100 million diluted shares outstanding, $800 million in total debt, $200 million in cash, and $50…medium
Why is cash subtracted when calculating enterprise value from equity value?medium
An investment banker is calculating diluted shares outstanding for the equity value bridge. The company has 50 million basic shares, 5…hard
Which of the following is an equity value multiple rather than an enterprise value multiple?easy
An investment banker calculates a target's enterprise value at $2 billion using a DCF analysis. The company has $400 million in net debt,…hard
The weighted average cost of capital (WACC) represents:easy
A company has a cost of equity of 12%, a pre-tax cost of debt of 6%, a tax rate of 25%, equity comprising 60% of capital, and debt…medium
According to the Capital Asset Pricing Model (CAPM), the cost of equity is calculated as:medium
An investment banker needs to calculate WACC for a private company that has no observable beta. The most appropriate approach is to:hard
All else being equal, if a company increases its proportion of debt financing, what is the expected impact on WACC?medium
In a DCF model, the terminal value captures:easy
Using the Gordon Growth Model (perpetuity growth method), terminal value is calculated as FCF x (1 + g) / (WACC - g). If the final year FCF…medium
An investment banker uses the exit multiple method to calculate terminal value. If the Year 5 projected EBITDA is $150 million and the…hard
If an analyst uses a perpetuity growth rate of 5% in the terminal value calculation for a US-based company, what concern should a senior…medium
In an accretion/dilution analysis, a transaction is considered accretive to the acquirer when:easy
An acquirer with a P/E ratio of 20x acquires a target with a P/E ratio of 12x in an all-stock transaction. Ignoring synergies, the deal is…medium
An investment banker is modeling a $500 million all-cash acquisition. The acquirer will finance the deal with new debt at a 5% interest…hard
Which of the following would make an all-stock acquisition MORE likely to be dilutive to the acquirer's EPS?medium
An investment banker is preparing pro forma financial statements for a proposed merger. Which of the following adjustments would NOT…medium
In preparing pro forma statements for a $1 billion acquisition, the target's net tangible assets have a fair value of $300 million and…hard
In M&A pro forma analysis, synergies typically refer to:easy
An investment banker is leading financial due diligence on a potential acquisition target. Which of the following findings would be the…medium
During due diligence, an analyst discovers that the target company's quality of earnings (QoE) report reveals $15 million in EBITDA…hard
An investment banker is advising a company on its optimal capital structure. The company currently has a debt-to-total-capitalization ratio…medium
An investment banker is evaluating a leveraged buyout target's credit profile. The company has EBITDA of $200 million, total debt of $900…hard
Apex Systems reports revenue of $120 million, cost of goods sold of $62 million, SG&A expense of $18 million, and depreciation of $6…easy
A buy-side analyst sees days sales outstanding rise from 28 days to 38 days while reported revenue growth accelerates. Which conclusion is…easy
Which ratio best measures a company’s short-term liquidity when a banker is checking whether current assets cover current liabilities?easy
A manufacturer has 75 days of inventory, 46 days sales outstanding, and 22 days payables outstanding. What is its cash conversion cycle?medium
Why can cash flow from operations exceed net income when a company records a large depreciation charge of $12 million?medium
A retailer's gross margin expands from 32% to 38% with flat SG&A as a percentage of sales. What does that most directly suggest?medium
A software issuer capitalizes $12 million of development costs that a peer group generally expenses as incurred. How does that choice…medium
A company generates EBIT of $60 million and annual interest expense of $14 million. What is the interest coverage ratio?medium
If inventory turnover rises from 6x to 7x while demand is stable, what is the best interpretation?hard
Which line item is most likely to create a difference between EBITDA and unlevered free cash flow in an acquisition model?hard
Blue Summit reports revenue of $170 million, cost of goods sold of $95 million, SG&A expense of $18 million, and depreciation of $10…easy
A equity capital markets banker sees days sales outstanding rise from 50 days to 62 days while reported revenue growth accelerates. Which…easy
A manufacturer has 75 days of inventory, 34 days sales outstanding, and 27 days payables outstanding. What is its cash conversion cycle?medium
Why can cash flow from operations exceed net income when a company records a large depreciation charge of $18 million?medium
A company generates EBIT of $60 million and annual interest expense of $10 million. What is the interest coverage ratio?medium
Summit Retail reports revenue of $220 million, cost of goods sold of $132 million, SG&A expense of $18 million, and depreciation of $6…easy
A buy-side analyst sees days sales outstanding rise from 42 days to 50 days while reported revenue growth accelerates. Which conclusion is…easy
A manufacturer has 75 days of inventory, 46 days sales outstanding, and 32 days payables outstanding. What is its cash conversion cycle?medium
Lakeside Software reports revenue of $270 million, cost of goods sold of $140 million, SG&A expense of $18 million, and depreciation of $10…easy
A equity capital markets banker sees days sales outstanding rise from 28 days to 38 days while reported revenue growth accelerates. Which…easy
A manufacturer has 75 days of inventory, 34 days sales outstanding, and 22 days payables outstanding. What is its cash conversion cycle?medium
Apex Systems reports revenue of $120 million, cost of goods sold of $67 million, SG&A expense of $18 million, and depreciation of $6…easy
A buy-side analyst sees days sales outstanding rise from 50 days to 62 days while reported revenue growth accelerates. Which conclusion is…easy
A manufacturer has 75 days of inventory, 46 days sales outstanding, and 27 days payables outstanding. What is its cash conversion cycle?medium
In a DCF, final-year unlevered free cash flow is $40 million, the perpetual growth rate is 2%, and WACC is 8%. Which expression is used to…easy
Why do precedent transaction multiples usually exceed comparable public company trading multiples for the same target?easy
Which valuation method is least affected by temporary differences in capital structure among peer companies?easy
A company has 70 million basic shares at $30 per share, $170 million of debt, and $35 million of cash. Ignoring dilutive securities, what…medium
Which statement about WACC in a DCF is correct?medium
A banker is selecting comparable companies. Which factor is most important to keep constant besides industry, size, and growth?medium
In a sum-of-the-parts valuation, why might an industrial conglomerate be worth more in pieces than as a whole?medium
Which of the following is the strongest reason to rely more heavily on a DCF than on precedent transactions?medium
In a DCF, final-year unlevered free cash flow is $56 million, the perpetual growth rate is 4%, and WACC is 10%. Which expression is used to…hard
A company has 70 million basic shares at $22 per share, $130 million of debt, and $35 million of cash. Ignoring dilutive securities, what…easy
In a DCF, final-year unlevered free cash flow is $72 million, the perpetual growth rate is 3%, and WACC is 9%. Which expression is used to…medium
A company has 70 million basic shares at $34 per share, $190 million of debt, and $35 million of cash. Ignoring dilutive securities, what…hard
A company has 70 million basic shares at $26 per share, $150 million of debt, and $35 million of cash. Ignoring dilutive securities, what…medium
A company has 70 million basic shares at $18 per share, $110 million of debt, and $35 million of cash. Ignoring dilutive securities, what…medium
Which financing instrument generally sits highest in the capital structure and therefore has first claim on collateral in a default?hard
A borrower has total debt of $250 million and LTM EBITDA of $45 million. What is total leverage?hard
Why is preferred stock usually viewed as sitting between debt and common equity in the capital structure?easy
What is the main purpose of a revolving credit facility in a sponsor-backed capital structure?easy
Which feature best describes payment-in-kind, or PIK, interest?easy
Which covenant metric is most directly designed to protect lenders against a borrower’s declining ability to service debt from cash…medium
What is a springing maturity in a credit agreement?medium
Why do bankers often calculate both gross leverage and net leverage?medium
A borrower has total debt of $340 million and LTM EBITDA of $45 million. What is total leverage?medium
A borrower has total debt of $280 million and LTM EBITDA of $45 million. What is total leverage?medium
A borrower has total debt of $220 million and LTM EBITDA of $45 million. What is total leverage?medium
A borrower has total debt of $310 million and LTM EBITDA of $45 million. What is total leverage?easy
What is the primary purpose of a sources and uses table in an acquisition model?medium
If a merger model does not balance after projected retained earnings are rolled forward, what should a banker check first?medium
A buyer expects $18 million of annual cost synergies but must incur one-time integration costs to capture them. How should the annual…hard
Why is circularity common in an LBO model?hard
In a DCF sensitivity table, which pair of assumptions is most commonly varied?easy
A model assumes accounts receivable equal 8% of annual revenue. What modeling approach is that?easy
Which statement about accretion/dilution modeling is correct?easy
When a banker builds multiple operating cases labeled downside, base, and upside, what is the banker doing?medium
A buyer expects $12 million of annual cost synergies but must incur one-time integration costs to capture them. How should the annual…medium
A buyer expects $21 million of annual cost synergies but must incur one-time integration costs to capture them. How should the annual…medium
A buyer expects $15 million of annual cost synergies but must incur one-time integration costs to capture them. How should the annual…easy
A buyer expects $24 million of annual cost synergies but must incur one-time integration costs to capture them. How should the annual…easy
Which metric is generally most important when comparing subscription software companies?medium
Why do bankers care about same-store sales when analyzing a retail chain?medium
A utility sector report emphasizes rate base growth more than unit volume growth. Why?medium
Which factor would most likely justify a higher trading multiple for one payments company versus another?medium
What does a high operating leverage business model usually mean?hard
When analyzing an airline, which KPI most directly reflects the percentage of seats sold?hard
Why can two companies in the same broad healthcare sector trade at very different EV/EBITDA multiples?easy
Which metric is most useful for analyzing a capital-light digital marketplace?easy
What is the main objective of a quality of earnings review in sell-side diligence?easy
If the top customer accounts for 29% of target revenue, what is the clearest diligence implication?medium
Why do acquirers review change-of-control provisions during legal diligence?medium
What is a virtual data room used for in an M&A process?medium
Which issue is most likely to be classified as debt-like in a purchase price negotiation?medium
Why is tax diligence important even when a target reports strong EBITDA?medium
What does a net working capital peg accomplish in a purchase agreement?hard
Which diligence workstream focuses on data privacy, system resilience, and breach history?hard
What is the clearest red flag if management consistently explains misses as timing issues but cash collections keep weakening?easy
If the top customer accounts for 36% of target revenue, what is the clearest diligence implication?easy
If the top customer accounts for 43% of target revenue, what is the clearest diligence implication?easy
If the top customer accounts for 22% of target revenue, what is the clearest diligence implication?easy