Adventis FMC Level 2 UPDATED Actual Exam Questions and CORRECT Answers
4 views 0 purchase
Course
Adventis FMC
Institution
Adventis FMC
Adventis FMC Level 2 UPDATED Actual
Exam Questions and CORRECT Answers
what is value - CORRECT ANSWER- what people are willing to pay for (what the buyer
pays)
who said, "Value is what people are willing to pay for" - CORRECT ANSWER- John
Naisbitt
2 primary types of valuation - CORRECT ANS...
Adventis FMC Level 2 UPDATED Actual
Exam Questions and CORRECT Answers
what is value - CORRECT ANSWER✔✔- what people are willing to pay for (what the buyer
pays)
who said, "Value is what people are willing to pay for" - CORRECT ANSWER✔✔- John
Naisbitt
relative valuation refers to what - CORRECT ANSWER✔✔- methods that compare the price
of a company to the market value of similar assets
intrinsic value refers to what - CORRECT ANSWER✔✔- the value of a company through
fundamental analysis without reference to its market value but instead around its ability to
generate cash flow
in an M&A context, what is EV - CORRECT ANSWER✔✔- transaction value
in an M&A context, what is equity value - CORRECT ANSWER✔✔- purchase price
a company sold for $100M and the company being bought had $15M of debt and $2M of
cash, what happens and what is the transaction value and purchase price - CORRECT
ANSWER✔✔- - the $2M would be used by shareholders of the acquired company to pay
down existing $15M in debt to make $13M in debt now (15 - 2 = 13)
- the proceeds from the deal would then be used to pay down the remaining debt (EV = CS +
PS + Debt - Cash)
- Result is 100 - 13 = 87
- TV = $100M
- Purchase price = $87 (check to shareholders of acquired company)
, 2 primary types of relative valuation - CORRECT ANSWER✔✔- 1. comparable company
analysis
2. acquisition comparables analysis
comparable companies analyses (public trading comparables analyses) - CORRECT
ANSWER✔✔- - most common types of relative valuation
- these methods allow investors to compare valuation of similar companies by comparing
similar ratios
most common public trading comparable ratios - CORRECT ANSWER✔✔- 1. EV/EBITDA
2. EV/Revenue
3. Net income/Earnings (share price/earnings per share)
assume a company has $5M of EBITDA and two public companies most similar to the
company trade at 6.0x and 7.0x EBITDA, what might you conclude - CORRECT
ANSWER✔✔- - Ex: 7.0 = x/5 ; 6.0 = x/5
- can conclude that EV for the company should be between 30-35 million
what happens when a company trades at a multiple that is a premium or a discount to the
industry average - CORRECT ANSWER✔✔- investors will dig in to understand the rationale
assume that a company trades at 7.0x EBITDA but the average of comparable companies is
9.0x, what can we conclude - CORRECT ANSWER✔✔- the company is being undervalued
and the investor will look to buy shares because he realizes that the share price will increase
Wall St. begins to value the company in-line with its peers
acquisition comparables analysis (transaction comparables analysis) - CORRECT
ANSWER✔✔- represent comparable acquisitions that have taken place and have been
publicly announced
are multiples for acquisition comparables higher or lower than mulitples for comparable
companies - CORRECT ANSWER✔✔- higher because acquirers need to pay a premium to
the current share price to gain control of the company
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 MGRADES. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.99. You're not tied to anything after your purchase.
