LBO MODELING EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED GUARANTEED PASS
net working capital =
receivables + inventory - payables
receivables days =
receivables/sales x 365
inventory days =
inventory/cogs x 365
payables days =
payables/cogs x 365
capex is estimated as a
% of sales, unless there is a more reasonable method
depreciation is estimated from a
capex/depreciation multiple
sources of funds
cash, revolver, debt (including revolver), equity
uses of funds
equity acquired, existing debt refinanced, debt issuance fees, advisory fees, minimum
cash
Equity value =
acquisition EV - net debt
, Acquisition EV =
entry LTM ebitda x entry EV/EBITDA multiple
main items to show in IS
net sales, cogs, EBITDA, depreciation, EBIT, interest expense, EBT, tax expense, net
income (where interest expense links to the debt schedule)
main line items to show in BS (assets)
cash, receivables, inventory, pp&e, investments, goodwill, intangibles
main line items to show in BS (liabilities)
revolver, debt, payables
main line items to show in BS (equity)
NCI, retained earnings, equity
cash flow statement flow down
ebitda - cash interest expense - tax expense - changes in net working capital - capex =
cash flow available for debt repayment - mandated repayments = cash flow available
after mandated payments + revolver issuance (repayments) - accelerated repayments =
cash flow for the year
cash flow from operations includes
ebitda, cash interest expense, tax expense, changes in net working capital
cash flow from investing includes
capex
cash flow from financing includes
mandated debt repayments, revolver issuance or repayments, accelerated repayments
(and any debt issuance but not the case for most LBOs)
COMPLETE SOLUTIONS VERIFIED GUARANTEED PASS
net working capital =
receivables + inventory - payables
receivables days =
receivables/sales x 365
inventory days =
inventory/cogs x 365
payables days =
payables/cogs x 365
capex is estimated as a
% of sales, unless there is a more reasonable method
depreciation is estimated from a
capex/depreciation multiple
sources of funds
cash, revolver, debt (including revolver), equity
uses of funds
equity acquired, existing debt refinanced, debt issuance fees, advisory fees, minimum
cash
Equity value =
acquisition EV - net debt
, Acquisition EV =
entry LTM ebitda x entry EV/EBITDA multiple
main items to show in IS
net sales, cogs, EBITDA, depreciation, EBIT, interest expense, EBT, tax expense, net
income (where interest expense links to the debt schedule)
main line items to show in BS (assets)
cash, receivables, inventory, pp&e, investments, goodwill, intangibles
main line items to show in BS (liabilities)
revolver, debt, payables
main line items to show in BS (equity)
NCI, retained earnings, equity
cash flow statement flow down
ebitda - cash interest expense - tax expense - changes in net working capital - capex =
cash flow available for debt repayment - mandated repayments = cash flow available
after mandated payments + revolver issuance (repayments) - accelerated repayments =
cash flow for the year
cash flow from operations includes
ebitda, cash interest expense, tax expense, changes in net working capital
cash flow from investing includes
capex
cash flow from financing includes
mandated debt repayments, revolver issuance or repayments, accelerated repayments
(and any debt issuance but not the case for most LBOs)
