Wall Street Prep Premium Exam Questions and Answers
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1. What is generally not considered to be a pre-tax non-recurring (unusual
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vv orinfrequent) item?: Ans- Extraordinary gains/losses
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2. what is false about depreciation and amortization: Ans- D&A may be
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vvclassifiedwithin interest expense v vv vv
3. Company X's current assets increased by $40 million from 2007-2008 vv vv vv vv vv vv vv vv vv
vvwhilethe companies current liabilities increased by $25 million over the
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vv same period. the cash impact of the change in working capital was: Ans-
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a decrease of 15 million
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4. the final component of an earnings projection model is calculating
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vv interestexpense. the calculation may create a circular reference because:
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vv Ans- interest expense affects net income, which affects FCF, which affects the
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amount of debt acompany pays down, which, in turn affects the interest expense,
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vvhence the circularreference
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5. a 10-q financial filing has all of the following characteristics except: Ans-
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vv vvissuedfour times a year. v vv vv vv
6. Depreciation Expense found in the SG&A line of the income vv vv vv vv vv vv vv vv vv
vv statement for a manufacturing firm would most likely be attributable to
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vv which of the following: Ans- vv vv v vv vv computers used by the accounting
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vv department
7. If a company has projected revenues of $10 billion, a gross profit
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1 vv/
vv8
,vv marginof 65%, and projected SG&A expenses of $2billion, what is the
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vv company's operating (EBIT) margin?: 45%
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8. A company has the following information, 1. 2014 revenues of $5
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billion,2013 Accounts receivable of $400 million, 2014 accounts receivable of
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$600 million,what are the days sales outstanding: 36.5
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9. A company has the following information:
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• 2014 Revenues of $8 billion
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• 2014 COGS of $5 billion
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• 2013 Accounts receivable of $400 million
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• 2014 Accounts receivable of $600 million
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• 2013 Inventories of $1 billion
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• 2014 Inventories of $800 million
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• 2013 Accounts payable of $250 million
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• 2014 Accounts payable of $300 million
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What are the inventory days for the company?: 65.7 days
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10. Which of the following is true: Coca Cola's brand name is not reflected as
vv vv vv vv vv vv vv vv vv vv vv vv vv
vv anintangible asset on its balance sheet
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11. A company has the following information:
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• 2014 share repurchase plan of $4 billion
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• Average share price of $60 for the year 2013
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2 vv/
vv8
, • Expected EPS growth for 2014 of 10% vv vv vv vv vv vv
What should the number of shares repurchased by the company be in
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vv yourfinancial model?: 60.6 million
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12. non-controlling interest: is an expense on the income statement and equity vv vv vv vv vv vv vv vv vv vv
vv othe balance sheet
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13. A company has the following information:
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• 2013 retained earnings balance of $12 billion
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• Net income of $3.5 billion in 2014
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• Capex of $200 million in 2014 vv vv vv vv vv
• Preferred dividends of $100 million in 2014 vv vv vv vv vv vv
• Common dividends of $400 million in 2014 vv vv vv vv vv vv
What is the retained earnings balance at the end of 2014?: 15 billion
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14. in order to find out how much cash is available to pay down short term
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vv debt, such as revolving credit line, you must take: beginning cash balance +
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vv pre-debt cash flows - min. cash balance - required principal payments of LT and
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vv other debt vv
15. to calculate interest expense in the future, you should do which of the
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vv following: apply a weighted average interest rate times the average debt
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vv balanceover the course of the yearv vv vv vv vv vv
16. enterprise (transaction) value represents the:: value of all capital invested
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vv ina business
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17. A debt holder would be primarily concerned with which of the
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vv followingmultiples? v
I. Enterprise (Transaction) Value / EBITDA vv vv vv vv
II. Price/Earnings
3 vv/
vv8
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1. What is generally not considered to be a pre-tax non-recurring (unusual
vv vv vv vv vv vv vv vv vv vv
vv orinfrequent) item?: Ans- Extraordinary gains/losses
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2. what is false about depreciation and amortization: Ans- D&A may be
vv vv vv vv vv vv vv vv vv vv vv
vvclassifiedwithin interest expense v vv vv
3. Company X's current assets increased by $40 million from 2007-2008 vv vv vv vv vv vv vv vv vv
vvwhilethe companies current liabilities increased by $25 million over the
v vv vv vv vv vv vv vv vv vv
vv same period. the cash impact of the change in working capital was: Ans-
vv vv vv vv vv vv vv vv vv vv vv vv vv
a decrease of 15 million
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4. the final component of an earnings projection model is calculating
vv vv vv vv vv vv vv vv vv
vv interestexpense. the calculation may create a circular reference because:
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vv Ans- interest expense affects net income, which affects FCF, which affects the
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amount of debt acompany pays down, which, in turn affects the interest expense,
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vvhence the circularreference
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5. a 10-q financial filing has all of the following characteristics except: Ans-
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vv vvissuedfour times a year. v vv vv vv
6. Depreciation Expense found in the SG&A line of the income vv vv vv vv vv vv vv vv vv
vv statement for a manufacturing firm would most likely be attributable to
v vv vv vv vv vv vv vv vv vv
vv which of the following: Ans- vv vv v vv vv computers used by the accounting
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vv department
7. If a company has projected revenues of $10 billion, a gross profit
vv vv vv vv vv vv vv vv vv vv vv
1 vv/
vv8
,vv marginof 65%, and projected SG&A expenses of $2billion, what is the
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vv company's operating (EBIT) margin?: 45%
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8. A company has the following information, 1. 2014 revenues of $5
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billion,2013 Accounts receivable of $400 million, 2014 accounts receivable of
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$600 million,what are the days sales outstanding: 36.5
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9. A company has the following information:
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• 2014 Revenues of $8 billion
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• 2014 COGS of $5 billion
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• 2013 Accounts receivable of $400 million
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• 2014 Accounts receivable of $600 million
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• 2013 Inventories of $1 billion
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• 2014 Inventories of $800 million
vv vv vv vv
• 2013 Accounts payable of $250 million
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• 2014 Accounts payable of $300 million
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What are the inventory days for the company?: 65.7 days
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10. Which of the following is true: Coca Cola's brand name is not reflected as
vv vv vv vv vv vv vv vv vv vv vv vv vv
vv anintangible asset on its balance sheet
v vv vv vv vv vv
11. A company has the following information:
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• 2014 share repurchase plan of $4 billion
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• Average share price of $60 for the year 2013
vv vv vv vv vv vv vv vv
2 vv/
vv8
, • Expected EPS growth for 2014 of 10% vv vv vv vv vv vv
What should the number of shares repurchased by the company be in
vv vv vv vv vv vv vv vv vv vv vv
vv yourfinancial model?: 60.6 million
v vv vv vv
12. non-controlling interest: is an expense on the income statement and equity vv vv vv vv vv vv vv vv vv vv
vv othe balance sheet
v vv vv
13. A company has the following information:
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• 2013 retained earnings balance of $12 billion
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• Net income of $3.5 billion in 2014
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• Capex of $200 million in 2014 vv vv vv vv vv
• Preferred dividends of $100 million in 2014 vv vv vv vv vv vv
• Common dividends of $400 million in 2014 vv vv vv vv vv vv
What is the retained earnings balance at the end of 2014?: 15 billion
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14. in order to find out how much cash is available to pay down short term
vv vv vv vv vv vv vv vv vv vv vv vv vv vv
vv debt, such as revolving credit line, you must take: beginning cash balance +
v vv vv vv vv vv vv vv vv vv vv vv
vv pre-debt cash flows - min. cash balance - required principal payments of LT and
v vv vv vv vv vv vv vv vv vv vv vv vv
vv other debt vv
15. to calculate interest expense in the future, you should do which of the
vv vv vv vv vv vv vv vv vv vv vv vv
vv following: apply a weighted average interest rate times the average debt
vv vv vv vv vv vv vv vv vv vv
vv balanceover the course of the yearv vv vv vv vv vv
16. enterprise (transaction) value represents the:: value of all capital invested
vv vv vv vv vv vv vv vv vv
vv ina business
v vv
17. A debt holder would be primarily concerned with which of the
vv vv vv vv vv vv vv vv vv vv
vv followingmultiples? v
I. Enterprise (Transaction) Value / EBITDA vv vv vv vv
II. Price/Earnings
3 vv/
vv8
