Review: Trading Comps Modeling Exam
Q u es t io n 1
The next two questions use data from Athenahealth financial filing, which can be downloaded by clicking here.
The next two questions will use the following scenario:
It is July 4, 2017 and you are asked to perform a company profile for Athenahealth (ATHN), with a latest closing share price of $140.07. The
company's most recent earnings report was for the first quarter 2017 for the period ending 3/31/2017.
Calculate ATHWs LTM Non-GAAP operating profit. Use the company's own definition of Non-GAAP operating profit when arriving at your
calculations.
Hint: You only need the Q1 2017 and Q4 2016 press releases to answer this question.
26.6
27.4
130.1
132.3
154.3
Q u e s ti o n 2
This question uses the same Athenahealth data as the previous question, which can be downloaded by clicking here.
This question uses the same scenario as the previous question, repeated below:
It is July 4, 2017 and you are asked to perform a company profile for Athenahealth (ATHN), with a latest closing share price of $140.07. The
company's most recent earnings report was for the first quarter 2017 for the period ending 3/31/2017.
Calculate ATHN's enterprise value.
Hint: You only need the Q1 2017 10Q and the 2016 10K to answer this question.
5,655.00
5,682.80
5,809.00
5,823.45
5,915.70
Question 3
A Company has the same level of Operating Income for Q1 of two consecutive years. However, for the more recent 01, levels of
D&A dropped.
When you compare the Company's most recent 01 LTM EBIT and EBITDA to those of its last complete fiscal year, you would expect:
LTM EBIT to increase, LTM EBITDA to decrease
LTM EBIT to increase, LTM EBITDA to increase
, LTM EBIT to stay flat, LTM EBITDA to stay flat
LTM EBIT to stay flat, LTM EBITDA to increase
LTM EBIT to stay flat. LTM EBITDA to
decrease
Question 4
Which of the following statements is most correct about building a comparable company analysis?
It is never appropriate to include the target company in the peer group.
Using the peer group's average multiple is preferable to using the peer group's median multiple when you suspect significant outliers.
When EBITDA forecasts are available, share price valuation using EV/next year EBITDA is always preferable to valuation using EV/LTM
EBITDA.
Comps analysis is preferable to the DCF for valuing the share price of public companies because the market is providing a clear valuation
signal.
Valuing the share price of a company based on the P/E of its peers is not as useful as valuing based on the EWEBITDA of its
peers
when the target and peer group have widely differing leverage.
Question 5
The next two questions use data from the "HealthRx Excel Worksheet", which can be downloaded by clicking here .
The next two questions will use the following scenario:
You are advising HealthRx on a potential sale of its business (a "sell side"). You have been assigned the task of performing a comparable
company analysis for HealthRx in order to present a reasonable valuation range for HealthRx. You have compiled all the relevant data in the
downloadable file given above.
Excluding HealthRx from the peer group, what is the per share equity value of HealthRx based on the average peer group LTM P/E ratio?
3838
38.81
39.04
40.36
55.15
Question 6
This question uses the same data as the previous question, which can be downloaded by clicking here
. This question uses the same scenario as the previous question, repeated below:
You are advising HealthRx on a potential sale of its business (a "sell side"). You have been assigned the task of performing a comparable
company analysis for HealthRx in order to present a reasonable valuation for HealthRx. You have compiled all the relevant data in the file
we've given you above.
Including HealthRx in the peer group, what is the per-share equity value for HealthRx based on the peer group's median Year 1 EV/Revenue
multiple?
142.08
145.81
151.65 X
152.27
156.04
Question 7
Which valuation multiple is most appropriate when a peer group includes companies with different depreciation methods and negative
EBITDA?
Q u es t io n 1
The next two questions use data from Athenahealth financial filing, which can be downloaded by clicking here.
The next two questions will use the following scenario:
It is July 4, 2017 and you are asked to perform a company profile for Athenahealth (ATHN), with a latest closing share price of $140.07. The
company's most recent earnings report was for the first quarter 2017 for the period ending 3/31/2017.
Calculate ATHWs LTM Non-GAAP operating profit. Use the company's own definition of Non-GAAP operating profit when arriving at your
calculations.
Hint: You only need the Q1 2017 and Q4 2016 press releases to answer this question.
26.6
27.4
130.1
132.3
154.3
Q u e s ti o n 2
This question uses the same Athenahealth data as the previous question, which can be downloaded by clicking here.
This question uses the same scenario as the previous question, repeated below:
It is July 4, 2017 and you are asked to perform a company profile for Athenahealth (ATHN), with a latest closing share price of $140.07. The
company's most recent earnings report was for the first quarter 2017 for the period ending 3/31/2017.
Calculate ATHN's enterprise value.
Hint: You only need the Q1 2017 10Q and the 2016 10K to answer this question.
5,655.00
5,682.80
5,809.00
5,823.45
5,915.70
Question 3
A Company has the same level of Operating Income for Q1 of two consecutive years. However, for the more recent 01, levels of
D&A dropped.
When you compare the Company's most recent 01 LTM EBIT and EBITDA to those of its last complete fiscal year, you would expect:
LTM EBIT to increase, LTM EBITDA to decrease
LTM EBIT to increase, LTM EBITDA to increase
, LTM EBIT to stay flat, LTM EBITDA to stay flat
LTM EBIT to stay flat, LTM EBITDA to increase
LTM EBIT to stay flat. LTM EBITDA to
decrease
Question 4
Which of the following statements is most correct about building a comparable company analysis?
It is never appropriate to include the target company in the peer group.
Using the peer group's average multiple is preferable to using the peer group's median multiple when you suspect significant outliers.
When EBITDA forecasts are available, share price valuation using EV/next year EBITDA is always preferable to valuation using EV/LTM
EBITDA.
Comps analysis is preferable to the DCF for valuing the share price of public companies because the market is providing a clear valuation
signal.
Valuing the share price of a company based on the P/E of its peers is not as useful as valuing based on the EWEBITDA of its
peers
when the target and peer group have widely differing leverage.
Question 5
The next two questions use data from the "HealthRx Excel Worksheet", which can be downloaded by clicking here .
The next two questions will use the following scenario:
You are advising HealthRx on a potential sale of its business (a "sell side"). You have been assigned the task of performing a comparable
company analysis for HealthRx in order to present a reasonable valuation range for HealthRx. You have compiled all the relevant data in the
downloadable file given above.
Excluding HealthRx from the peer group, what is the per share equity value of HealthRx based on the average peer group LTM P/E ratio?
3838
38.81
39.04
40.36
55.15
Question 6
This question uses the same data as the previous question, which can be downloaded by clicking here
. This question uses the same scenario as the previous question, repeated below:
You are advising HealthRx on a potential sale of its business (a "sell side"). You have been assigned the task of performing a comparable
company analysis for HealthRx in order to present a reasonable valuation for HealthRx. You have compiled all the relevant data in the file
we've given you above.
Including HealthRx in the peer group, what is the per-share equity value for HealthRx based on the peer group's median Year 1 EV/Revenue
multiple?
142.08
145.81
151.65 X
152.27
156.04
Question 7
Which valuation multiple is most appropriate when a peer group includes companies with different depreciation methods and negative
EBITDA?
