lOMoARcPSD|14985576
Financial Modeling Exam Wall Street Prep
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
A company has the following information:
• 2014 Revenues of $8 billion
• 2014 COGS of $5 billion
• 2013 Accounts receivable of $400 million
• 2014 Accounts receivable of $600 million
• 2013 Inventories of $1 billion
• 2014 Inventories of $800 million
• 2013 Accounts payable of $250 million
• 2014 Accounts payable of $300 million
What are the inventory days for the company? - ANSWER 65.7 days
Which of the following is true - ANSWER Coca Cola's brand name is not reflected
as an intangible asset on its balance sheet
A company has the following information:
• 2014 share repurchase plan of $4 billion
Downloaded by Clare Kemmy ()
, lOMoARcPSD|14985576
• Average share price of $60 for the year 2013
• Expected EPS growth for 2014 of 10%
What should the number of shares repurchased by the company be in your financial
model? - ANSWER 60.6 million
non-controlling interest - ANSWER is an expense on the income statement and
equity o the balance sheet
A company has the following information:
• 2013 retained earnings balance of $12 billion
• Net income of $3.5 billion in 2014
• Capex of $200 million in 2014
• Preferred dividends of $100 million in 2014
• Common dividends of $400 million in 2014
What is the retained earnings balance at the end of 2014? - ANSWER 15 billion
in order to find out how much cash is available to pay down short term debt, such as
revolving credit line, you must take - ANSWER beginning cash balance + pre-debt
cash flows - min. cash balance - required principal payments of LT and other debt
to calculate interest expense in the future, you should do which of the following -
ANSWER apply a weighted average interest rate times the average debt balance
over the course of the year
enterprise (transaction) value represents the: - ANSWER value of all capital
invested in a business
A debt holder would be primarily concerned with which of the following multiples?
I. Enterprise (Transaction) Value / EBITDA
II. Price/Earnings
III. Enterprise (Transaction) Value / Sales - ANSWER 1 and 3 only
On January 1, 2014, shares of Company X trade at $6.50 per share, with 400 million
shares outstanding. The company has net debt of $300 million. After building an
earnings model for Company X, you have projected free cash flow for each year
through 2020 as follows:
Year 2014 2015 2016 2017 2018 2019 2020
Free Cash Flow 110 120 150 170 200 250 280
You estimate that the weighted average cost of capital (WACC) for Company X is
10% and assume that free cash flows grow in perpetuity at 3.0% annually beyond
2020, the final projected year. Estimate the present value of the projected free cash
flows through 2020, discounted at the stated WACC. Assume all cash flows are
generated at the end of the year (i.e., no mid-year adjustment): - ANSWER 837
million
On January 1, 2014, shares of Company X trade at $6.50 per share, with 400 million
shares outstanding. The
Downloaded by Clare Kemmy ()
Financial Modeling Exam Wall Street Prep
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
A company has the following information:
• 2014 Revenues of $8 billion
• 2014 COGS of $5 billion
• 2013 Accounts receivable of $400 million
• 2014 Accounts receivable of $600 million
• 2013 Inventories of $1 billion
• 2014 Inventories of $800 million
• 2013 Accounts payable of $250 million
• 2014 Accounts payable of $300 million
What are the inventory days for the company? - ANSWER 65.7 days
Which of the following is true - ANSWER Coca Cola's brand name is not reflected
as an intangible asset on its balance sheet
A company has the following information:
• 2014 share repurchase plan of $4 billion
Downloaded by Clare Kemmy ()
, lOMoARcPSD|14985576
• Average share price of $60 for the year 2013
• Expected EPS growth for 2014 of 10%
What should the number of shares repurchased by the company be in your financial
model? - ANSWER 60.6 million
non-controlling interest - ANSWER is an expense on the income statement and
equity o the balance sheet
A company has the following information:
• 2013 retained earnings balance of $12 billion
• Net income of $3.5 billion in 2014
• Capex of $200 million in 2014
• Preferred dividends of $100 million in 2014
• Common dividends of $400 million in 2014
What is the retained earnings balance at the end of 2014? - ANSWER 15 billion
in order to find out how much cash is available to pay down short term debt, such as
revolving credit line, you must take - ANSWER beginning cash balance + pre-debt
cash flows - min. cash balance - required principal payments of LT and other debt
to calculate interest expense in the future, you should do which of the following -
ANSWER apply a weighted average interest rate times the average debt balance
over the course of the year
enterprise (transaction) value represents the: - ANSWER value of all capital
invested in a business
A debt holder would be primarily concerned with which of the following multiples?
I. Enterprise (Transaction) Value / EBITDA
II. Price/Earnings
III. Enterprise (Transaction) Value / Sales - ANSWER 1 and 3 only
On January 1, 2014, shares of Company X trade at $6.50 per share, with 400 million
shares outstanding. The company has net debt of $300 million. After building an
earnings model for Company X, you have projected free cash flow for each year
through 2020 as follows:
Year 2014 2015 2016 2017 2018 2019 2020
Free Cash Flow 110 120 150 170 200 250 280
You estimate that the weighted average cost of capital (WACC) for Company X is
10% and assume that free cash flows grow in perpetuity at 3.0% annually beyond
2020, the final projected year. Estimate the present value of the projected free cash
flows through 2020, discounted at the stated WACC. Assume all cash flows are
generated at the end of the year (i.e., no mid-year adjustment): - ANSWER 837
million
On January 1, 2014, shares of Company X trade at $6.50 per share, with 400 million
shares outstanding. The
Downloaded by Clare Kemmy ()
