Adventis FMC Level 2 questions with answers

Adventis FMC Level 2 questions with answers |/ |/ |/ |/ |/ |/




what is value - CORRECT ANSWERS ✔✔what people are willing to
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pay for (what the buyer pays)
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who said, "Value is what people are willing to pay for" - CORRECT
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ANSWERS ✔✔John Naisbitt
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2 primary types of valuation - CORRECT ANSWERS ✔✔1. relative
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valuation
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2. intrinsic valuation
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relative valuation refers to what - CORRECT ANSWERS
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✔✔methods that compare the price of a company to the market
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value of similar assets
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intrinsic value refers to what - CORRECT ANSWERS ✔✔the value
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of a company through fundamental analysis without reference to
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its market value but instead around its ability to generate cash
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flow
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in an M&A context, what is EV - CORRECT ANSWERS
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✔✔transaction value
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in an M&A context, what is equity value - CORRECT ANSWERS
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✔✔purchase price
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, a company sold for $100M and the company being bought had
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$15M of debt and $2M of cash, what happens and what is the
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transaction value and purchase price - CORRECT ANSWERS ✔✔-
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the $2M would be used by shareholders of the acquired
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company to pay down existing $15M in debt to make $13M in
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debt now (15 - 2 = 13)
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- the proceeds from the deal would then be used to pay down the
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remaining debt (EV = CS + PS + Debt - Cash)
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- Result is 100 - 13 = 87
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- TV = $100M
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- Purchase price = $87 (check to shareholders of acquired
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company)
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2 primary types of relative valuation - CORRECT ANSWERS ✔✔1.
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comparable company analysis
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2. acquisition comparables analysis
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comparable companies analyses (public trading comparables |/ |/ |/ |/ |/


analyses) - CORRECT ANSWERS ✔✔- most common types of
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relative valuation
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- these methods allow investors to compare valuation of similar
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companies by comparing similar ratios
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most common public trading comparable ratios - CORRECT
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ANSWERS ✔✔1. EV/EBITDA
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2. EV/Revenue |/




3. Net income/Earnings (share price/earnings per share)
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