WALL STREET PREP PREMIUM EXAM LATEST QUESTIONS WITH 100% CORRECT RIGHT ANS-WERS
10 views 0 purchase
Course
Wall Street Prep
Institution
Wall Street Prep
WALL STREET PREP PREMIUM EXAM LATEST QUESTIONS WITH 100% CORRECT RIGHT ANS-WERS
What is generally not considered to be a pre-tax non-recurring (unusual or infrequent) item? - right ans-Extraordinary gains/losses
what is false about depreciation and amortization - right ans-D&A may be classi...
LBO MODEL (BREAKING INTO WALL STREET) LATEST QUESTIONS WITH 100% CORRECT RIGHT ANS -WER S Walk me t hrough a basic LBO model? - right ans -✔✔1) Assumptions of purchase price, debt/equity ratio, interest rate on debt, and other variables and you might assume something about company's revenue growth or margins. 2)Create sources & uses section 3) Adjust company's b alance sheet for the new debt, equity, Goodwill, and other intangibles. 4) Project company's income statement, balance sheet, and cash flow statement and determine debt schedule. 5)Assumptions about EBITDA exit multiple and calculate return based on how mu ch equity is returned to the firm Why would you use leverage when buying a company? - right ans -✔✔1) Boost return, since debt is not "your money". Easier to earn a higher return on a $5 bil company with $2 bil of your money and $3 bil than $3 bil of your money a nd $2 bil. 2)Firm also has more capital available to purchase other companies because they've used leverage. What variables impact an LBO model the most? - right ans -✔✔1) Purchase and exit multiples biggest return 2)leverage used 3)operational characteristics such as revenue growth and EBITDA margins How do you pick purchase multiples and exit multiples in an LBO model ? - right ans -
✔✔1)Same as others, look at comparable companies are trading at and what multiples similar LBO tr right ans -actions have had. Sensitivity analysis of purchase and exit multiples. 2)Sometimes you set purchase and exit multiples based on specific IRR target that you're trying to achieve. What is an "ideal" candidate for an LBO? - right ans -✔✔1) Stable and predictable cash flows 2) low -risk businesses 3) low capex 4) opportunity for expense reductions to boost margins 5)Strong management team 6) base of assets to us e as a collateral for debt When use LBO model for valuation and why is it low? - right ans -✔✔Use it to value a company by setting a targeted IRR and then back -solving in Excel to determine purchase price for PE firm. Low because PE firms almost always pay less t han a strategic acquirer would "Real -Life" LBO - right ans -✔✔Common example; mortgage on a house.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MASTERGRADE01. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
