Transaction Comps and LBO Modeling
Exam – Wall Street Prep – 2025/2026
Edition – Verified Questions and Correct
Answers
What is generally not considered to be a pre-tax non-recurring (unusual or infrequent)
item? -CORRECTANSWER Extraordinary gains/losses
what is false about depreciation and amortization -CORRECTANSWER 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 -CORRECTANSWER 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 -CORRECTANSWER 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 -
CORRECTANSWER 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 -
CORRECTANSWER 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?
-CORRECTANSWER 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 -CORRECTANSWER 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? -CORRECTANSWER 65.7 days
Which of the following is true -CORRECTANSWER 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
• 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? -CORRECTANSWER 60.6 million
non-controlling interest -CORRECTANSWER 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
Exam – Wall Street Prep – 2025/2026
Edition – Verified Questions and Correct
Answers
What is generally not considered to be a pre-tax non-recurring (unusual or infrequent)
item? -CORRECTANSWER Extraordinary gains/losses
what is false about depreciation and amortization -CORRECTANSWER 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 -CORRECTANSWER 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 -CORRECTANSWER 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 -
CORRECTANSWER 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 -
CORRECTANSWER 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?
-CORRECTANSWER 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 -CORRECTANSWER 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? -CORRECTANSWER 65.7 days
Which of the following is true -CORRECTANSWER 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
• 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? -CORRECTANSWER 60.6 million
non-controlling interest -CORRECTANSWER 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
