Breaking into wallstreet Questions with complete solution

Breaking into wallstreet Questions with complete solution Relative valuation - correct answer Comparing a company to what similar companies are worth. You mostly look at other public companies and recent m&a deals (precedent transactions) to estimate what your company might be worth. universally applicable except for when the data is spotty and/or the company you're analyzing is unique and can't be compared to other companies Intrinsic valuation - correct answer estimating the net present value of its future cash flows or estimating how much its assets are worth minus its liabilities 1. estimating future cash flows and discounting them back to their present value (money today is worth more than money tomorrow) or 2. valuing the firm's assets and assuming the firm's total value is linked to its adjusted asset value-its liabilities in some way DCF - correct answer a firm's value is the sum of its discounted future cash flows and its discounted terminal value (whatever it is worth at the end of the 5-10 year period you analyze) use when valuing standard industries (consumer/retail, tech, healthcare,, industrials) net asset value or liquidation model - correct answer common in balance-sheet centric industries such as insurance. value a firm's assets and liabilities (modified total asset value-total liability value) When is DCF not applicable? - correct answer 1. free cash flow is not a meaningful metric 2. the industry is asset-centric and so you're better off valuing the company's assets and liabilities