Accounting, Valuation, DCF, Equity

What are the main sections of the Income Statement?

• Cash Flow from Operations, Cash Flow from Investing, Cash Flow from Financing

• Revenue and COGS, Operating Expenses, Other Income and Expenses, Taxes and Net Income

• Operating Expenses, Assets, Liabilities, Other Income and Expenses

• Assets, Liabilities and Equity

How do you select comparable companies and precedent transactions?

• Public comps, DCF, net worth of CEO

• Net Worth, industry classification, multiples

• Geography, information system, public comps

• Industry classification, financial criteria, geography

What is the formula for Enterprise Value?

• Assets = Liabilities + Equity

• Equity Value + Debit + Preferred Stock + Minority Interest - Cash

• Share Price * Diluted Shares

• None of the above

What is a key rule of the Balance Sheet?

• Operating expenses always appear on the Balance Sheet.

• It does NOT have to be in balance.

• Assets = Liabilities + Equity

• Liabilities = Assets + Equity

What are the three valuation methodologies?

• EBITA, Precedent Transactions, Net Present Value

• Valuations, Net Present Value, DCF

• Multiples, Public Comps, DCF

• Public Comps, Precedent Transactions, Discounted Cash Flow Analysis

Which of the following is true about change in working capital?

• If an asset goes UP, cash flow goes DOWN

• If an asset goes UP, cash flow goes DOWN

• If a liability goes UP, cash flow goes DOWN

• None of the above

What is the basic principle of DCF?

• Focus on ONLY valuing the equity portion

• Present value of a company’s future cash flows

• Future value of a company’s present cash flows

• Compare similar companies to find value

What is the difference between equity value and enterprise value?

• Equity value focuses on creating a picture for equity investors SPECIFICALLY, and enterprise value focuses on creating a picture for ALL investors

• Equity value is a hidden value no one can calculate, and Enterprise Value is an extremely public value (everyone knows it).

• Equity value focuses on creating a picture for ALL investors, and enterprise value focuses on creating a picture for equity investors SPECIFICALLY

• Enterprise value changes (in theory) when the capital structure changes, equity value does NOT

What are some of the best sources that you should use to find information on companies (select all of the above):

• 10-Q and 10-K

• Confidential insider information

• Earnings Calls

• Rumor Mills

• Wikipedia

What does the Cash Flow from Financing section contain?

• None of the above

• Items related to investments, acquisitions, and PP&E

• Items related to debt, dividends, and issuing/repurchasing shares

• Net Income adjusted for non-cash expenses