NURSING TEST

Unit 1 - Challenge 1 Goals and Organizations of Financial Management Questions and Answers Finance is the study of fund management and a. credit b. accounting c. economics d. asset allocation asset allocation The primary purpose of finance is to __________. a. manage assets in a way that maximizes returns b. pay off debt as quickly as possible c. study the effects of the economy on businesses d. keep track of a business's cash flow manage assets in a way that maximizes r...

Equity Valuation pt. 3 Questions and Answers A price earnings ratio that is derived from the Gordon growth model is inversely related to the: A) growth rate. B) dividend payout ratio. C) required rate of return. C) required rate of return. P/E is inversely related to the required rate of return, r, and directly related to the growth rate, g, and the dividend payout ratio, D/E. The primary difference between P/E multiples based on comparables and P/E multiples based on fundamentals...

LLC Valuations Questions and Answer Walk me from Revenue to EBITDA. Start with revenue and subtract cogs which gives me gross profit, and then from there I subtract my operating expenses which gives me my operating income. After that I add in additional profit which gives me my EBIT, and then from there I add in depreciation and amoritization From a high level, what are the two types of valuation? Relative valuation and intrinsic valuation What is a relative valuation? Comparin...

Business Valuations Questions and Answers An advocate: Introduces subjective factors and attempts to rely more heavily on qualitative factors. What are the three main reasons for tax related valuations? Estate tax, gift tax, and allocation of purchase price The major point(s) of Internal Revenue Code §2703 is/are... 1. An exception to restrictions on property exists for any option, agreement, right or restriction which (1) is a bona fide business arrangement, (2) is not a devi...

IB Accounting Valuation Qualitative Subset Questions and Answers How do you value a company? Intrinsic valuation (DCF) versus Relative valuation (Multiples) What is the appropriate discount rate to use in an unlevered DCF? Weighted average cost of capital (weighted average of cost of debt / cost of equity) What is typically higher, the cost of debt or the cost of equity? Cost of equity, comes with higher risk and larger upside potential. Debt is paid first in capital stack. ...

Valuation Terms Questions and Answers 3 main approaches to valuation Intrinsic, relative, asset-based What's a LBO? a group of investors (typically private equity firm) purchases a company and finances the transaction primarily with debt. When is asset-based valuation used a company liquidating a bankruptcy filing Most popular model for intrinsic valuation Discounted Cash Flow (DCF) Why is relative Valuation popular? Easy What do you estimate the value...

Free Cash Flow and Other Valuation Models, LOS 31-34 Questions and Answers When to use FCFF instead of Div Discount Method appropriate models to use when (1) the firm doesn't pay dividends at all or pays out fewer dividends than dictated by its cash flow, (2) free cash flow tracks profitability, or (3) the analyst takes a corporate control perspective Warm-Up: Free Cash Flow Forget about all the complicated financial statement relationships for a minute and simply picture the fir...

Unit 6 Corporate Valuation Questions and Answers Which of the following are issues in the creation of the financial statements for business units? I. Allocating corporate overhead costs. II. Dealing with intercompany transactions. III. Estimating unit betas. IV. Dealing with incomplete information when using public information. I, II, and IV only. Which of the following questions relate to the economic consistency of a model? I. Are the patterns intended? II. Are the patterns reas...

Unit 4 Corporate Valuation Questions & Answers Special applications are used for corporate valuation for which of the following special situations? Valuation of a company that is facing corporate financial restructuring Valuation in mergers and acquisitions Valuation of a company in distress As the new vice president (VP) of finance, you report to the chief financial officer (CFO). In this capacity, your responsibilities include the assessment of new business investment opportunities ...

CFA level 1 - EI - equity valuation Questions and Answers An analyst estimating intrinsic value is implicitly questioning what? the market's estimate of value If the market's estimated value exceeds the market price, the analyst infers the security is (undervalued over overvalued)? undervalued If the market's estimated value equals the market price, the analyst infers the security is (fairly valued or unfairly valued)? fairly valued If the market's estimated ...

Valuation Fundamentals Questions & Answers Steps to DCF Analysis 1. Calculate unlevered free cash flows 2. Calculate weighted average cost of capital 3. Calculate terminal value 4. Calculate enterprise value by determining present value of FCFs and terminal value 5. Solve for equity value and share price Calculating Unlevered Free Cash Flow EBITDA Proxy for operating CF -D&A Need to capture D&A tax shield -------- EBIT Operating Profit -Taxes LT effective tax rate * EBIT -----...

Investment Banking Valuation Questions and Answers What are the 3 ways to value a company The 3 ways to are comparable companies, Precedent transactions, an discounted cash flow analysis Comparable companies and precedent transactions are relative valuations based on the trading multiples of companies and transactions of similar size in similar industries A DCF on the orter hand is an intrinsic valuaion based on the present value of a company's projected free cash flow Are the...

Chapter 8 Valuation of Inventories Questions and Answers Average cost method price items in the inventory on the basis of the average cost of all similar goods. periodic inventory method - weighted perpetual method - moving averages. Consigned goods Inventory held by one party (the consignee) who acts as the agent for the owner of the goods (the consignor) in selling the goods. The consignee accepts and holds the consigned goods without any liability, except to exercise due care and r...

Exam 3 CH 11 Stock Valuation and Risk Questions and Answers Fundamental analysis relies on fundamental financial characteristics (like earnings) of the firm and its corresponding industry that are expected to influence stock values Technical analysis relies on stock price trends to determine stock values Price-earnings method applies the mean price-earnings (PE) ratio (based on expected earnings rather than recent earnings) of all publicly traded competitors in the respective i...

Chapter 12 Valuation Cash Flow Based Approaches Questions and Answers Which of the following is not a problem with using a dividend-based valuation formula? a. Dividends are arbitrarily established. b. Dividends represent a transfer of wealth to shareholders. c. Some firms do not pay a regular periodic dividend. d. It is a challenge to forecast the final liquidating dividend. b The conceptual framework for free cash flows separates the balance sheet equation into the following c...

Valuation Concepts and Methods (Prelims) Questions and Answers False ToF: Firm value is determined under the going concern assumption. The going concern assumption believes that the entity will not continue to do its business activities into the unforeseeable future False - Liquidation Value ToF: 2. Present Value is the net amount that would be realized if the business is terminated and the assets are sold piecemeal False - Fair Market Value ToF: Book Value is the price, expres...

Managerial Finance Chapter 6 Stock Valuation Questions and Answers What is the primary role of a designated market maker (DMM)? Provide a two-sided market The voting procedure where you must control 50 percent plus one of the outstanding shares of stock to guarantee that you will win a seat on the board of directors is called _____ voting. Straight An agent who arranges security transactions among investors without maintaining an inventory of their own is called a: Broker ...

Balance Sheet, Accounts & Valuation Questions and Answers Balance Sheet was first created for Analyzing strengths and weaknesses in companies Current Ratio Current Assets / Current Liabilities; measure of liquidity Fair Value Amount that the security would sell for/be purchased for in a market that has willing and objective buyers and sellers Types of Long Term Assets 1. Investments 2. Plant and Equipment 3. Intangibles 4. Deferred Assets 5. Other Assets Defe...

Valuation Fundamentals Questions and Answers WACC Formula [Ke x E / (D+E)] + [ Kd x (1 - T) x D/ D + E)] Ke = cost of equity Kd = cost of debt E = market value of equity D = market value of debt T = marginal tax rate Cost of Equity / CAPM Ke = Rf + [β * (Rm - Rf)] Ke = cost of equity Rf = Risk-free rate β = Beta Rm = market rate of return Rm - Rf = market risk premium Ke = required annual rate of return that a company's equity investors expect to receive Ri...

Valuation Questions plus Answers What are the two ways to value a company? Intrinsic and Relative (two within each Transaction Comparables, Trading Comparables, DCF , LBO) What are the two types of intrinsic valuation Discounted Cash Flow (more respected in academia and more commonly used in IB) and Leveraged Buyout What are the two types of relative valuation 1. Compare similar transactions 2. compare similar companies walk me through transaction comps higher multiple...