Investment Banking Technical Interview 243 Questions With Correct Answers|43 Pages

Would you be calculating Enterprise Value or Equity Value when using a multiple based on free cash flow or EBITDA? - ️️Enterprise Value. EBITDA and free cash flow represent cash flows that are available to repay holders of a company's debt and equity, so a multiple based on one of those two metrics would describe the value of the firm to all investors. What does Balance Sheet show? What's the equation? - ️️It is a snapshot of the company's economic resources and funding for those economic resources AT a given point in time. Assets= Liabilities + Shareholder's Equity What does the Income Statement show? What's the equation? - ️️The income statement illustrates the profitability of the company OVER a specified period of time Net Income = Revenues- Expenses What does Cash Flow Statement show? What's the equation? - ️️Shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities (over a period of time). Beginning Cash+ CF from Operations+ CF from Investing+ CF from Financing= Ending Cash How are the three financial statements connected? - ️️The bottom line of the Income Statement is Net Income. Net income links to both the Balance Sheet and Cash Flow statement. In terms of the balance sheet, net income flows into stockholder's equity via retained earnings. Retained earnings is equal to the previous period's retained earnings plus net income from this period minus dividends (from this period).