Test Bank for Trading Comps
Modeling Exam
From Wall Street Prep
Comprehensive Study Guide with 100+ Solved Questions
Prepared by: Study Resource Team
,Table of Contents
1. Part 1: Foundations of Trading Comps Modeling
2. Part 2: Step-by-Step Walkthrough
3. Part 3: 100+ Practice Questions with Solutions
,Part 1: Foundations of Trading Comps Modeling
What are Trading Comps?
Trading comparables (trading comps) are a relative valuation methodology that compares a
company’s financial metrics and valuation multiples to those of publicly traded peers. The goal is to
estimate a company’s value by benchmarking against similar businesses.
Common Multiples Used in Trading Comps
1. EV/EBITDA 2. EV/EBIT 3. EV/Sales 4. P/E Ratio 5. P/B Ratio
Steps in Building Trading Comps
1. Define the peer group. 2. Collect market data: share price, shares outstanding, debt, cash. 3.
Calculate Market Cap and Enterprise Value. 4. Normalize financial metrics (EBITDA, Net Income).
5. Compute multiples and interpret the valuation range.
, Part 3: Practice Questions with Solutions
Q1. Which of the following best describes the purpose of trading
comps?
A) To calculate liquidation value
B) To estimate intrinsic value using DCF
C) To determine relative valuation based on peer companies
D) To project future cash flows
■ Answer: C
Explanation: Trading comps are used for relative valuation by benchmarking against similar
companies’ multiples.
Q2. A company has Market Cap = $800m, Debt = $300m, Cash =
$50m. What is its Enterprise Value?
A) $1,050m
B) $1,100m
C) $1,150m
D) $1,200m
■ Answer: A
Explanation: EV = Market Cap + Debt - Cash = 800 + 300 - 50 = 1,050m.
Q3. A company reports EBITDA = $100m. EV = $1,000m. What is
its EV/EBITDA multiple?
A) 8.0x
B) 9.0x
C) 10.0x
D) 12.0x
■ Answer: C
Explanation: EV/EBITDA = = 10.0x.
Q4. Which multiple is most commonly used for capital-intensive
businesses?
A) P/E
B) EV/EBITDA
C) EV/Sales
D) P/B
Modeling Exam
From Wall Street Prep
Comprehensive Study Guide with 100+ Solved Questions
Prepared by: Study Resource Team
,Table of Contents
1. Part 1: Foundations of Trading Comps Modeling
2. Part 2: Step-by-Step Walkthrough
3. Part 3: 100+ Practice Questions with Solutions
,Part 1: Foundations of Trading Comps Modeling
What are Trading Comps?
Trading comparables (trading comps) are a relative valuation methodology that compares a
company’s financial metrics and valuation multiples to those of publicly traded peers. The goal is to
estimate a company’s value by benchmarking against similar businesses.
Common Multiples Used in Trading Comps
1. EV/EBITDA 2. EV/EBIT 3. EV/Sales 4. P/E Ratio 5. P/B Ratio
Steps in Building Trading Comps
1. Define the peer group. 2. Collect market data: share price, shares outstanding, debt, cash. 3.
Calculate Market Cap and Enterprise Value. 4. Normalize financial metrics (EBITDA, Net Income).
5. Compute multiples and interpret the valuation range.
, Part 3: Practice Questions with Solutions
Q1. Which of the following best describes the purpose of trading
comps?
A) To calculate liquidation value
B) To estimate intrinsic value using DCF
C) To determine relative valuation based on peer companies
D) To project future cash flows
■ Answer: C
Explanation: Trading comps are used for relative valuation by benchmarking against similar
companies’ multiples.
Q2. A company has Market Cap = $800m, Debt = $300m, Cash =
$50m. What is its Enterprise Value?
A) $1,050m
B) $1,100m
C) $1,150m
D) $1,200m
■ Answer: A
Explanation: EV = Market Cap + Debt - Cash = 800 + 300 - 50 = 1,050m.
Q3. A company reports EBITDA = $100m. EV = $1,000m. What is
its EV/EBITDA multiple?
A) 8.0x
B) 9.0x
C) 10.0x
D) 12.0x
■ Answer: C
Explanation: EV/EBITDA = = 10.0x.
Q4. Which multiple is most commonly used for capital-intensive
businesses?
A) P/E
B) EV/EBITDA
C) EV/Sales
D) P/B
