Trading Comps Modeling Exam | Wall Street
Prep 2025 Edition
Complete Exam with Verified Questions, Step-by-Step Calculations, and
Rationales
A+ Graded | 100% Updated for 2025 | Comprehensive Equity Valuation
Practice
About This Exam
The Trading Comps Modeling Exam (Wall Street Prep 2025 Edition) is a professional-level
practical exam designed to test your understanding and execution of Comparable Company
Analysis (Trading Comps) — one of the three core valuation methodologies used in investment
banking, equity research, and corporate finance.
This exam replicates the hands-on structure and analytical rigor of Wall Street Prep’s official
modeling certification tests, ensuring candidates can:
Collect, normalize, and analyze public trading data
Calculate and interpret valuation multiples such as EV/EBITDA, EV/Revenue, and P/E
Build equity and enterprise value bridges
Apply peer benchmarking to derive implied valuation ranges
Use Excel-based modeling functions to automate calculations
By completing this exam, you will demonstrate your ability to perform full-scale public comps
valuation, interpret market-based multiples, and make informed valuation judgments consistent
with Wall Street standards.
✍️ Answer Format
Each question in this exam is structured in the Wall Street Prep Verified Answer Format:
Topics Covered
✅ Comparable Company Analysis (Trading Comps) Fundamentals
✅ Enterprise Value and Equity Value Framework
✅ EV/EBITDA, EV/Revenue, P/E, and PEG Multiples
✅ Market Capitalization and Net Debt Adjustments
✅ Peer Selection and Normalization Adjustments
✅ Forward vs. Trailing Multiples
✅ Sensitivity & Range Valuation Analysis
✅ Case Study: Valuation of Orion Technologies, Inc.
,Trading Comps Modeling Exam — Wall Street Prep 2025 Edition
SECTION 1 — Fundamentals (Q1–15)
Q1. What is the primary objective of Trading Comps (Comparable Company
Analysis)?
✔ To derive an implied valuation range for a target using multiples observed
from comparable public companies.
Rationale: Trading comps reflect how the market values peer companies and
provide market-based benchmarks.
Q2. Which multiples are most commonly used in Trading Comps?
✔ EV/Revenue, EV/EBITDA, P/E (Price/Earnings).
Rationale: EV-based multiples are capital-structure neutral; P/E is equity-focused.
Q3. Why are EV/EBITDA multiples often preferred over P/E?
✔ EV/EBITDA excludes capital structure and non-operating items, making it
comparable across firms.
Rationale: Useful when comparing firms with different debt levels or tax rates.
Q4. What does “LTM” stand for and why is it used?
✔ Last Twelve Months; it reflects the most recent trailing performance.
Rationale: LTM captures recent operating results and is commonly used for
multiples.
Q5. What is the difference between EV and Market Cap?
✔ EV = Market Cap + Net Debt + Minority Interest + Preferred – Cash;
, Market Cap = equity value only.
Rationale: EV measures total enterprise value available to all capital providers.
Q6. When should you use forward (NTM) multiples vs trailing (LTM)?
✔ When you want to value based on projected, near-term earnings — use
NTM for forward-looking valuation.
Rationale: NTM captures expected growth already priced by the market.
Q7. Why remove nonrecurring items when calculating adjusted EBITDA?
✔ To reflect sustainable core earnings and improve comparability.
Rationale: One-off items distort multiples.
Q8. Why might you use median instead of mean for peer multiples?
✔ Median reduces distortion from outliers.
Rationale: Median gives the central tendency less influenced by extremes.
Q9. What are two key criteria for selecting comparables?
✔ Industry/product similarity and similar size/growth/market dynamics.
Rationale: Ensures the comps reflect comparable economics.
Q10. What effect does higher net debt have on implied equity value (all else
equal)?
✔ Equity value decreases (EV − Net Debt = Equity Value).
Rationale: More debt reduces the equity portion of enterprise value.
Q11. What is “capital structure neutrality” and which multiple demonstrates it?
✔ The ability to compare firms regardless of leverage; EV/EBITDA
Prep 2025 Edition
Complete Exam with Verified Questions, Step-by-Step Calculations, and
Rationales
A+ Graded | 100% Updated for 2025 | Comprehensive Equity Valuation
Practice
About This Exam
The Trading Comps Modeling Exam (Wall Street Prep 2025 Edition) is a professional-level
practical exam designed to test your understanding and execution of Comparable Company
Analysis (Trading Comps) — one of the three core valuation methodologies used in investment
banking, equity research, and corporate finance.
This exam replicates the hands-on structure and analytical rigor of Wall Street Prep’s official
modeling certification tests, ensuring candidates can:
Collect, normalize, and analyze public trading data
Calculate and interpret valuation multiples such as EV/EBITDA, EV/Revenue, and P/E
Build equity and enterprise value bridges
Apply peer benchmarking to derive implied valuation ranges
Use Excel-based modeling functions to automate calculations
By completing this exam, you will demonstrate your ability to perform full-scale public comps
valuation, interpret market-based multiples, and make informed valuation judgments consistent
with Wall Street standards.
✍️ Answer Format
Each question in this exam is structured in the Wall Street Prep Verified Answer Format:
Topics Covered
✅ Comparable Company Analysis (Trading Comps) Fundamentals
✅ Enterprise Value and Equity Value Framework
✅ EV/EBITDA, EV/Revenue, P/E, and PEG Multiples
✅ Market Capitalization and Net Debt Adjustments
✅ Peer Selection and Normalization Adjustments
✅ Forward vs. Trailing Multiples
✅ Sensitivity & Range Valuation Analysis
✅ Case Study: Valuation of Orion Technologies, Inc.
,Trading Comps Modeling Exam — Wall Street Prep 2025 Edition
SECTION 1 — Fundamentals (Q1–15)
Q1. What is the primary objective of Trading Comps (Comparable Company
Analysis)?
✔ To derive an implied valuation range for a target using multiples observed
from comparable public companies.
Rationale: Trading comps reflect how the market values peer companies and
provide market-based benchmarks.
Q2. Which multiples are most commonly used in Trading Comps?
✔ EV/Revenue, EV/EBITDA, P/E (Price/Earnings).
Rationale: EV-based multiples are capital-structure neutral; P/E is equity-focused.
Q3. Why are EV/EBITDA multiples often preferred over P/E?
✔ EV/EBITDA excludes capital structure and non-operating items, making it
comparable across firms.
Rationale: Useful when comparing firms with different debt levels or tax rates.
Q4. What does “LTM” stand for and why is it used?
✔ Last Twelve Months; it reflects the most recent trailing performance.
Rationale: LTM captures recent operating results and is commonly used for
multiples.
Q5. What is the difference between EV and Market Cap?
✔ EV = Market Cap + Net Debt + Minority Interest + Preferred – Cash;
, Market Cap = equity value only.
Rationale: EV measures total enterprise value available to all capital providers.
Q6. When should you use forward (NTM) multiples vs trailing (LTM)?
✔ When you want to value based on projected, near-term earnings — use
NTM for forward-looking valuation.
Rationale: NTM captures expected growth already priced by the market.
Q7. Why remove nonrecurring items when calculating adjusted EBITDA?
✔ To reflect sustainable core earnings and improve comparability.
Rationale: One-off items distort multiples.
Q8. Why might you use median instead of mean for peer multiples?
✔ Median reduces distortion from outliers.
Rationale: Median gives the central tendency less influenced by extremes.
Q9. What are two key criteria for selecting comparables?
✔ Industry/product similarity and similar size/growth/market dynamics.
Rationale: Ensures the comps reflect comparable economics.
Q10. What effect does higher net debt have on implied equity value (all else
equal)?
✔ Equity value decreases (EV − Net Debt = Equity Value).
Rationale: More debt reduces the equity portion of enterprise value.
Q11. What is “capital structure neutrality” and which multiple demonstrates it?
✔ The ability to compare firms regardless of leverage; EV/EBITDA
