Modeling questions with correct Answers
Which of the following statements about a P/E multiple is false? - It is not affected by non-cash expenses
j j j j j j j j j j j j j j j j j j
Why are acquisition multiples typically higher than comparable companies analysis? - Acquisition multiples
j j j j j j j j j j j j
typically incorporate a premium
j j j j
Enterprise value is - Similar in theory to transaction value
j j j j j j j j j
What is the formula for equity value? - Share price x shares outstanding
j j j j j j j j j j j j
Which of the following pairs belongs together? - Enterprise value and EBITDA
j j j j j j j j j j j
Which of the following pairs do not belong together? - Enterprise Value and Net Earnings
j j j j j j j j j j j j j j
Which of the following does not belong with enterprise value in a multiple? - Net Earnings
j j j j j j j j j j j j j j j
What is the primary difference between trading comparables and acquisition comparables? - Trading
j j j j j j j j j j j j
comparables change as the share price changes in the stock market, whereas acquisition comparables are
j j j j j j j j j j j j j j j
based on historical M&A transactions and remain static
j j j j j j j j
Companies A&B both have revenue of $1,000 and EV/Revenue multiples of 1.5x. Company A has an
j j j j j j j j j j j j j j j
EV/EBITDA of 6.0x and Company B has an EV/EBITDA of 8.0x. What is Company A's EBITDA? - $250
j j j j j j j j j j j j j j j j j j
Companies A and B both have revenue of $1,000 and EV/Revenue multiples of 1.5x. Company A has an
j j j j j j j j j j j j j j j j j
EV/EBITDA of 6.0x and Company B has an EBITDA margin of 15%. What is Company B's EBITDA multiple? -
j j j j j j j j j j j j j j j j j j j
10.0x
j
If a company is announced to be sold for a transaction value of $15 million and it has $2.5million of debt and
j j j j j j j j j j j j j j j j j j j j j
$2.0million of cash, what is the purchase price of the company? - $14.5million
j j j j j j j j j j j j j
Which of the following statements about a P/E multiple is false? - It is not affected by non-cash expenses
j j j j j j j j j j j j j j j j j j
Why are acquisition multiples typically higher than comparable companies analysis? - Acquisition multiples
j j j j j j j j j j j j
typically incorporate a premium
j j j j
Enterprise value is - Similar in theory to transaction value
j j j j j j j j j
What is the formula for equity value? - Share price x shares outstanding
j j j j j j j j j j j j
Which of the following pairs belongs together? - Enterprise value and EBITDA
j j j j j j j j j j j
Which of the following pairs do not belong together? - Enterprise Value and Net Earnings
j j j j j j j j j j j j j j
Which of the following does not belong with enterprise value in a multiple? - Net Earnings
j j j j j j j j j j j j j j j
What is the primary difference between trading comparables and acquisition comparables? - Trading
j j j j j j j j j j j j
comparables change as the share price changes in the stock market, whereas acquisition comparables are
j j j j j j j j j j j j j j j
based on historical M&A transactions and remain static
j j j j j j j j
Companies A&B both have revenue of $1,000 and EV/Revenue multiples of 1.5x. Company A has an
j j j j j j j j j j j j j j j
EV/EBITDA of 6.0x and Company B has an EV/EBITDA of 8.0x. What is Company A's EBITDA? - $250
j j j j j j j j j j j j j j j j j j
Companies A and B both have revenue of $1,000 and EV/Revenue multiples of 1.5x. Company A has an
j j j j j j j j j j j j j j j j j
EV/EBITDA of 6.0x and Company B has an EBITDA margin of 15%. What is Company B's EBITDA multiple? -
j j j j j j j j j j j j j j j j j j j
10.0x
j
If a company is announced to be sold for a transaction value of $15 million and it has $2.5million of debt and
j j j j j j j j j j j j j j j j j j j j j
$2.0million of cash, what is the purchase price of the company? - $14.5million
j j j j j j j j j j j j j
