WALL STREET PREP PREMIUM EXAM
What44is44generally44not44considered44to44be44a44pre-tax44non-
recurring44(unusual44or44infrequent)44item?44-44answer--Extraordinary44gains/losses
what44is44false44about44depreciation44and44amortization44-44answer--
D&A44may44be44classified44within44interest44expense
Company44X's44current44assets44increased44by44$4044million44from442007-
200844while44the44companies44current44liabilities44increased44by44$2544million44over44th
e44same44period.44the44cash44impact44of44the44change44in44working44capital44was44-
44answer--a44decrease44of441544million
the44final44component44of44an44earnings44projection44model44is44calculating44interest44ex
pense.44the44calculation44may44create44a44circular44reference44because44-44answer--
interest44expense44affects44net44income,44which44affects44FCF,44which44affects44the44a
mount44of44debt44a44company44pays44down,44which,44in44turn44affects44the44interest44ex
pense,44hence44the44circular44reference
a4410-q44financial44filing44has44all44of44the44following44characteristics44except44-
44answer--issued44four44times44a44year.
Depreciation44Expense44found44in44the44SG&A44line44of44the44income44statement44for44a
44manufacturing44firm44would44most44likely44be44attributable44to44which44of44the44followin
g44-44answer--computers44used44by44the44accounting44department
If44a44company44has44projected44revenues44of44$1044billion,44a44gross44profit44margin44o
f4465%,44and44projected44SG&A44expenses44of44$2billion,44what44is44the44company's44o
perating44(EBIT)44margin?44-44answer--45%
A44company44has44the44following44information,441.44201444revenues44of44$544billion,201
344Accounts44receivable44of44$40044million,44201444accounts44receivable44of44$60044mill
ion,44what44are44the44days44sales44outstanding44-44answer--36.5
A44company44has44the44following44information:
•44201444Revenues44of44$844billion
•44201444COGS44of44$544billion
•44201344Accounts44receivable44of44$40044million
, •44201444Accounts44receivable44of44$60044million
•44201344Inventories44of44$144billion
•44201444Inventories44of44$80044million
•44201344Accounts44payable44of44$25044million
•44201444Accounts44payable44of44$30044million
What44are44the44inventory44days44for44the44company?44-44answer--65.744days
Which44of44the44following44is44true44-44answer--
Coca44Cola's44brand44name44is44not44reflected44as44an44intangible44asset44on44its44bala
nce44sheet
A44company44has44the44following44information:
•44201444share44repurchase44plan44of44$444billion
•44Average44share44price44of44$6044for44the44year442013
•44Expected44EPS44growth44for44201444of4410%
What44should44the44number44of44shares44repurchased44by44the44company44be44in44your
44financial44model?44-44answer--60.644million
non-controlling44interest44-44answer--
is44an44expense44on44the44income44statement44and44equity44o44the44balance44sheet
A44company44has44the44following44information:
•44201344retained44earnings44balance44of44$1244billion
•44Net44income44of44$3.544billion44in442014
•44Capex44of44$20044million44in442014
•44Preferred44dividends44of44$10044million44in442014
•44Common44dividends44of44$40044million44in442014
What44is44the44retained44earnings44balance44at44the44end44of442014?44-44answer--
1544billion
in44order44to44find44out44how44much44cash44is44available44to44pay44down44short44term44d
ebt,44such44as44revolving44credit44line,44you44must44take44-44answer--
beginning44cash44balance44+44pre-debt44cash44flows44-44min.44cash44balance44-
44required44principal44payments44of44LT44and44other44debt
to44calculate44interest44expense44in44the44future,44you44should44do44which44of44the44follo
wing44-44answer--
apply44a44weighted44average44interest44rate44times44the44average44debt44balance44over4
4the44course44of44the44year
enterprise44(transaction)44value44represents44the:44-44answer--
value44of44all44capital44invested44in44a44business
A44debt44holder44would44be44primarily44concerned44with44which44of44the44following44mult
iples?
I.44Enterprise44(Transaction)44Value44/44EBITDA
What44is44generally44not44considered44to44be44a44pre-tax44non-
recurring44(unusual44or44infrequent)44item?44-44answer--Extraordinary44gains/losses
what44is44false44about44depreciation44and44amortization44-44answer--
D&A44may44be44classified44within44interest44expense
Company44X's44current44assets44increased44by44$4044million44from442007-
200844while44the44companies44current44liabilities44increased44by44$2544million44over44th
e44same44period.44the44cash44impact44of44the44change44in44working44capital44was44-
44answer--a44decrease44of441544million
the44final44component44of44an44earnings44projection44model44is44calculating44interest44ex
pense.44the44calculation44may44create44a44circular44reference44because44-44answer--
interest44expense44affects44net44income,44which44affects44FCF,44which44affects44the44a
mount44of44debt44a44company44pays44down,44which,44in44turn44affects44the44interest44ex
pense,44hence44the44circular44reference
a4410-q44financial44filing44has44all44of44the44following44characteristics44except44-
44answer--issued44four44times44a44year.
Depreciation44Expense44found44in44the44SG&A44line44of44the44income44statement44for44a
44manufacturing44firm44would44most44likely44be44attributable44to44which44of44the44followin
g44-44answer--computers44used44by44the44accounting44department
If44a44company44has44projected44revenues44of44$1044billion,44a44gross44profit44margin44o
f4465%,44and44projected44SG&A44expenses44of44$2billion,44what44is44the44company's44o
perating44(EBIT)44margin?44-44answer--45%
A44company44has44the44following44information,441.44201444revenues44of44$544billion,201
344Accounts44receivable44of44$40044million,44201444accounts44receivable44of44$60044mill
ion,44what44are44the44days44sales44outstanding44-44answer--36.5
A44company44has44the44following44information:
•44201444Revenues44of44$844billion
•44201444COGS44of44$544billion
•44201344Accounts44receivable44of44$40044million
, •44201444Accounts44receivable44of44$60044million
•44201344Inventories44of44$144billion
•44201444Inventories44of44$80044million
•44201344Accounts44payable44of44$25044million
•44201444Accounts44payable44of44$30044million
What44are44the44inventory44days44for44the44company?44-44answer--65.744days
Which44of44the44following44is44true44-44answer--
Coca44Cola's44brand44name44is44not44reflected44as44an44intangible44asset44on44its44bala
nce44sheet
A44company44has44the44following44information:
•44201444share44repurchase44plan44of44$444billion
•44Average44share44price44of44$6044for44the44year442013
•44Expected44EPS44growth44for44201444of4410%
What44should44the44number44of44shares44repurchased44by44the44company44be44in44your
44financial44model?44-44answer--60.644million
non-controlling44interest44-44answer--
is44an44expense44on44the44income44statement44and44equity44o44the44balance44sheet
A44company44has44the44following44information:
•44201344retained44earnings44balance44of44$1244billion
•44Net44income44of44$3.544billion44in442014
•44Capex44of44$20044million44in442014
•44Preferred44dividends44of44$10044million44in442014
•44Common44dividends44of44$40044million44in442014
What44is44the44retained44earnings44balance44at44the44end44of442014?44-44answer--
1544billion
in44order44to44find44out44how44much44cash44is44available44to44pay44down44short44term44d
ebt,44such44as44revolving44credit44line,44you44must44take44-44answer--
beginning44cash44balance44+44pre-debt44cash44flows44-44min.44cash44balance44-
44required44principal44payments44of44LT44and44other44debt
to44calculate44interest44expense44in44the44future,44you44should44do44which44of44the44follo
wing44-44answer--
apply44a44weighted44average44interest44rate44times44the44average44debt44balance44over4
4the44course44of44the44year
enterprise44(transaction)44value44represents44the:44-44answer--
value44of44all44capital44invested44in44a44business
A44debt44holder44would44be44primarily44concerned44with44which44of44the44following44mult
iples?
I.44Enterprise44(Transaction)44Value44/44EBITDA
