2024 Trading Comps Modeling
Exam Wall Street Prep / Wall
Street Prep Premium Exam
Transaction Comps Modeling
Wall Street Prep Exam GRADED
A+
the terminal value of a business that grows indefinitely is calculated
as follows - ✔✔✔ANSWER-cash flow from period "t+1" divided by
(discount rate-growth rate)
the two-stage DCF model is: - ✔✔✔ANSWER-where stage 1 is an
explicit projection of free cash flows (generally for 5-10 years), and
,stage 2 is a lump-sum estimate of the cash flows beyond the explicit
forecast period
disadvantages of a DCF do not include - ✔✔✔ANSWER-free cash
flows over the first 5-10 year period represent a significant portion of
value and are highly sensitive to valuation assumptions
the typical sell-side process - ✔✔✔ANSWER-shorter than the buy
side, buyer secures financing, and doesn't involve id'ing potential
issues to address such as ownership and unusual equity structures,
liabilities, etc.
While equity contribution went as low as the single digits in the
1980's, the current split between equity and debt in an LBO deal is
best characterized as: - ✔✔✔ANSWER-Equity - 35%; Debt 65%
What is generally not considered to be a pre-tax non-recurring
(unusual or infrequent) item? - ✔✔✔ANSWER-Extraordinary
gains/losses
what is false about depreciation and amortization - ✔✔✔ANSWER-
D&A may be classified within interest expense
Company X's current assets increased by $40 million from 2007-
2008 while the companies current liabilities increased by $25
, million over the same period. the cash impact of the change in
working capital was - ✔✔✔ANSWER-a decrease of 15 million
the final component of an earnings projection model is calculating
interest expense. the calculation may create a circular reference
because - ✔✔✔ANSWER-interest expense affects net income,
which affects FCF, which affects the amount of debt a company
pays down, which, in turn affects the interest expense, hence the
circular reference
a 10-q financial filing has all of the following characteristics except -
✔✔✔ANSWER-issued four times a year.
Depreciation Expense found in the SG&A line of the income
statement for a manufacturing firm would most likely be attributable
to which of the following - ✔✔✔ANSWER-computers used by the
accounting department
If a company has projected revenues of $10 billion, a gross profit
margin of 65%, and projected SG&A expenses of $2billion, what is
the company's operating (EBIT) margin? - ✔✔✔ANSWER-45%
A company has the following information, 1. 2014 revenues of $5
billion,2013 Accounts receivable of $400 million, 2014 accounts
receivable of $600 million, what are the days sales outstanding -
✔✔✔ANSWER-36.5
Exam Wall Street Prep / Wall
Street Prep Premium Exam
Transaction Comps Modeling
Wall Street Prep Exam GRADED
A+
the terminal value of a business that grows indefinitely is calculated
as follows - ✔✔✔ANSWER-cash flow from period "t+1" divided by
(discount rate-growth rate)
the two-stage DCF model is: - ✔✔✔ANSWER-where stage 1 is an
explicit projection of free cash flows (generally for 5-10 years), and
,stage 2 is a lump-sum estimate of the cash flows beyond the explicit
forecast period
disadvantages of a DCF do not include - ✔✔✔ANSWER-free cash
flows over the first 5-10 year period represent a significant portion of
value and are highly sensitive to valuation assumptions
the typical sell-side process - ✔✔✔ANSWER-shorter than the buy
side, buyer secures financing, and doesn't involve id'ing potential
issues to address such as ownership and unusual equity structures,
liabilities, etc.
While equity contribution went as low as the single digits in the
1980's, the current split between equity and debt in an LBO deal is
best characterized as: - ✔✔✔ANSWER-Equity - 35%; Debt 65%
What is generally not considered to be a pre-tax non-recurring
(unusual or infrequent) item? - ✔✔✔ANSWER-Extraordinary
gains/losses
what is false about depreciation and amortization - ✔✔✔ANSWER-
D&A may be classified within interest expense
Company X's current assets increased by $40 million from 2007-
2008 while the companies current liabilities increased by $25
, million over the same period. the cash impact of the change in
working capital was - ✔✔✔ANSWER-a decrease of 15 million
the final component of an earnings projection model is calculating
interest expense. the calculation may create a circular reference
because - ✔✔✔ANSWER-interest expense affects net income,
which affects FCF, which affects the amount of debt a company
pays down, which, in turn affects the interest expense, hence the
circular reference
a 10-q financial filing has all of the following characteristics except -
✔✔✔ANSWER-issued four times a year.
Depreciation Expense found in the SG&A line of the income
statement for a manufacturing firm would most likely be attributable
to which of the following - ✔✔✔ANSWER-computers used by the
accounting department
If a company has projected revenues of $10 billion, a gross profit
margin of 65%, and projected SG&A expenses of $2billion, what is
the company's operating (EBIT) margin? - ✔✔✔ANSWER-45%
A company has the following information, 1. 2014 revenues of $5
billion,2013 Accounts receivable of $400 million, 2014 accounts
receivable of $600 million, what are the days sales outstanding -
✔✔✔ANSWER-36.5
