M&A Modeling Exam questions and
Answers From Wall Street Prep
B
Which of the following statements about a P/E multiple is false? - ANSWER It is not
affected by non-cash expenses
LU
Why are acquisition multiples typically higher than comparable companies analysis? -
ANSWER Acquisition multiples typically incorporate a premium
YC
Enterprise value is - ANSWER Similar in theory to transaction value
D
What is the formula for equity value? - ANSWER Share price x shares outstanding
TU
Which of the following pairs belongs together? - ANSWER Enterprise value and
EBITDA
ES
Which of the following pairs do not belong together? - ANSWER Enterprise Value
and Net Earnings
C
Which of the following does not belong with enterprise value in a multiple? - ANSWER
A
Net Earnings
What is the primary difference between trading comparables and acquisition
comparables? - ANSWER Trading comparables change as the share price changes in
, the stock market, whereas acquisition comparables are based on historical M&A
transactions and remain static
Companies A&B both have revenue of $1,000 and EV/Revenue multiples of 1.5x.
Company A has an EV/EBITDA of 6.0x and Company B has an EV/EBITDA of 8.0x.
What is Company A's EBITDA? - ANSWER $250
B
Companies A and B both have revenue of $1,000 and EV/Revenue multiples of 1.5x.
LU
Company A has an EV/EBITDA of 6.0x and Company B has an EBITDA margin of
15%. What is Company B's EBITDA multiple? - ANSWER 10.0x
YC
If a company is announced to be sold for a transaction value of $15 million and it has
$2.5million of debt and $2.0million of cash, what is the purchase price of the company? -
ANSWER $14.5million
D
Which of the below line items is not included in calculating unlevered free cash flow in a
TU
DCF? - ANSWER Interest
What is the calculation for present value? - ANSWER Future value / (1+ discount
ES
rate)^term
A security pays $100 in 3 years and you require a minimum rate of return of 12%
C
annually. What is the maximum amount you will purchase this security for today? -
A
ANSWER $71.18
You receive a loan for $20,000. The loan accumulates interest at a rate of 4.5%. How
much interest will you owe in 4 years? - ANSWER $3,850.37
Answers From Wall Street Prep
B
Which of the following statements about a P/E multiple is false? - ANSWER It is not
affected by non-cash expenses
LU
Why are acquisition multiples typically higher than comparable companies analysis? -
ANSWER Acquisition multiples typically incorporate a premium
YC
Enterprise value is - ANSWER Similar in theory to transaction value
D
What is the formula for equity value? - ANSWER Share price x shares outstanding
TU
Which of the following pairs belongs together? - ANSWER Enterprise value and
EBITDA
ES
Which of the following pairs do not belong together? - ANSWER Enterprise Value
and Net Earnings
C
Which of the following does not belong with enterprise value in a multiple? - ANSWER
A
Net Earnings
What is the primary difference between trading comparables and acquisition
comparables? - ANSWER Trading comparables change as the share price changes in
, the stock market, whereas acquisition comparables are based on historical M&A
transactions and remain static
Companies A&B both have revenue of $1,000 and EV/Revenue multiples of 1.5x.
Company A has an EV/EBITDA of 6.0x and Company B has an EV/EBITDA of 8.0x.
What is Company A's EBITDA? - ANSWER $250
B
Companies A and B both have revenue of $1,000 and EV/Revenue multiples of 1.5x.
LU
Company A has an EV/EBITDA of 6.0x and Company B has an EBITDA margin of
15%. What is Company B's EBITDA multiple? - ANSWER 10.0x
YC
If a company is announced to be sold for a transaction value of $15 million and it has
$2.5million of debt and $2.0million of cash, what is the purchase price of the company? -
ANSWER $14.5million
D
Which of the below line items is not included in calculating unlevered free cash flow in a
TU
DCF? - ANSWER Interest
What is the calculation for present value? - ANSWER Future value / (1+ discount
ES
rate)^term
A security pays $100 in 3 years and you require a minimum rate of return of 12%
C
annually. What is the maximum amount you will purchase this security for today? -
A
ANSWER $71.18
You receive a loan for $20,000. The loan accumulates interest at a rate of 4.5%. How
much interest will you owe in 4 years? - ANSWER $3,850.37
