DISCOUNTED CASH FLOW MODEL EXAM NEWEST 2025 ACTUAL EXAM
COMPLETE 150 QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+
What is the definition of Enterprise Value? - (ANSWER)The value of the
operating business (operating assets minus operating liabilities)
1. Operating Assets (Usually all assets except for cash and other
investment assets)
2. Operating Liabilities (usually all liabilities except for debt and debt-
like liabilities)
3. Enterprise Value doesn't equal the value of the entire business.
What is the definition of Net Debt? - (ANSWER)Net Debt represents the
Net Current Obligations from Non-Operating Line Items. (All current
debt obligations minus cash)
What is the definition of Equity Value? - (ANSWER)This is the value of
the portion of the company that goes back to all equity owners in the
company. This is the Net Enterprise Value after all debt obligations are
theoretically paid off.
What are the two main frameworks for valuation? - (ANSWER)Intrinsic
Valuation (DCF) and Relative Valuation (Comps)
What is the definition of Intrinsic Valuation (DCF)? - (ANSWER)This is
derived from the fundemental analysis of the company's cash flow
generation potential
, DISCOUNTED CASH FLOW MODEL EXAM NEWEST 2025 ACTUAL EXAM
COMPLETE 150 QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+
What is the definition of Relative Valuation (Comps)? - (ANSWER)This is
derived by comparing a company to its comparable peers.
What is the definition of cash flows? - (ANSWER)This is one of the
annoying sticking points in finance. There are a million definitions for
cash flows. The one WSP uses is:
Cash Flows = Operating Cash Flows - Required Cash Reinvestment
1. Operating Cash Flows: Cash flows that come from the core operations
of a business
2. Required Reinvestments: Cash Reinvestments required to sustain the
business's expected rate of growth
Which is better to use, DCF modeling or Comps modeling? -
(ANSWER)The answer is both. In theory, they should get to the same
answer. This would be the case if every company was valued at their
intrinsic value on the market. However, companies are sometimes
overvalued and undervalued on the market. It helps to have DCF as a
way to calculate the value without relying on the market. On the other
hand, if you use incorrect growth drivers (such as an incorrect growth
rate) then your DCF model will be skewed. It is important to use both
options together to build a more complete picture of the real value of
the company.
What are the big DCF implementation Challenges? - (ANSWER)1. There
is no real consensus on how to implement DCF
2. Cost of Equity calculations are hotly contested
COMPLETE 150 QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+
What is the definition of Enterprise Value? - (ANSWER)The value of the
operating business (operating assets minus operating liabilities)
1. Operating Assets (Usually all assets except for cash and other
investment assets)
2. Operating Liabilities (usually all liabilities except for debt and debt-
like liabilities)
3. Enterprise Value doesn't equal the value of the entire business.
What is the definition of Net Debt? - (ANSWER)Net Debt represents the
Net Current Obligations from Non-Operating Line Items. (All current
debt obligations minus cash)
What is the definition of Equity Value? - (ANSWER)This is the value of
the portion of the company that goes back to all equity owners in the
company. This is the Net Enterprise Value after all debt obligations are
theoretically paid off.
What are the two main frameworks for valuation? - (ANSWER)Intrinsic
Valuation (DCF) and Relative Valuation (Comps)
What is the definition of Intrinsic Valuation (DCF)? - (ANSWER)This is
derived from the fundemental analysis of the company's cash flow
generation potential
, DISCOUNTED CASH FLOW MODEL EXAM NEWEST 2025 ACTUAL EXAM
COMPLETE 150 QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+
What is the definition of Relative Valuation (Comps)? - (ANSWER)This is
derived by comparing a company to its comparable peers.
What is the definition of cash flows? - (ANSWER)This is one of the
annoying sticking points in finance. There are a million definitions for
cash flows. The one WSP uses is:
Cash Flows = Operating Cash Flows - Required Cash Reinvestment
1. Operating Cash Flows: Cash flows that come from the core operations
of a business
2. Required Reinvestments: Cash Reinvestments required to sustain the
business's expected rate of growth
Which is better to use, DCF modeling or Comps modeling? -
(ANSWER)The answer is both. In theory, they should get to the same
answer. This would be the case if every company was valued at their
intrinsic value on the market. However, companies are sometimes
overvalued and undervalued on the market. It helps to have DCF as a
way to calculate the value without relying on the market. On the other
hand, if you use incorrect growth drivers (such as an incorrect growth
rate) then your DCF model will be skewed. It is important to use both
options together to build a more complete picture of the real value of
the company.
What are the big DCF implementation Challenges? - (ANSWER)1. There
is no real consensus on how to implement DCF
2. Cost of Equity calculations are hotly contested
