Wall Stret Prep Premium
Exam/Questions with Detailed
Answers/Verified
What is generally not considered to be a pre-tax non-recurring (unusual
or infrequent) item? - -Extraordinary gains/losses
-what is false about depreciation and amortization - -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 -
-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 - -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 - -
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 - -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? - -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 - -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? - -65.7 days
, -Which of the following is true - -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? - -60.6 million
-non-controlling interest - -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
What is the retained earnings balance at the end of 2014? - -15 billion
-in order to find out how much cash is available to pay down short
term debt, such as revolving credit line, you must take - -beginning
cash balance + pre-debt cash flows - min. cash balance - required
principal payments of LT and other debt
-to calculate interest expense in the future, you should do which of the
following - -apply a weighted average interest rate times the average
debt balance over the course of the year
-enterprise (transaction) value represents the: - -value of all capital
invested in a business
-A debt holder would be primarily concerned with which of the
following multiples?
I. Enterprise (Transaction) Value / EBITDA
II. Price/Earnings
III. Enterprise (Transaction) Value / Sales - -1 and 3 only
-On January 1, 2014, shares of Company X trade at $6.50 per share,
with 400 million shares outstanding. The company has net debt of $300
million. After building an earnings model for Company X, you have
projected free cash flow for each year through 2020 as follows:
Year 2014 2015 2016 2017 2018 2019 2020
Free Cash Flow 110 120 150 170 200 250 280
You estimate that the weighted average cost of capital (WACC) for
Company X is 10% and assume that free cash flows grow in perpetuity
Exam/Questions with Detailed
Answers/Verified
What is generally not considered to be a pre-tax non-recurring (unusual
or infrequent) item? - -Extraordinary gains/losses
-what is false about depreciation and amortization - -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 -
-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 - -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 - -
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 - -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? - -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 - -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? - -65.7 days
, -Which of the following is true - -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? - -60.6 million
-non-controlling interest - -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
What is the retained earnings balance at the end of 2014? - -15 billion
-in order to find out how much cash is available to pay down short
term debt, such as revolving credit line, you must take - -beginning
cash balance + pre-debt cash flows - min. cash balance - required
principal payments of LT and other debt
-to calculate interest expense in the future, you should do which of the
following - -apply a weighted average interest rate times the average
debt balance over the course of the year
-enterprise (transaction) value represents the: - -value of all capital
invested in a business
-A debt holder would be primarily concerned with which of the
following multiples?
I. Enterprise (Transaction) Value / EBITDA
II. Price/Earnings
III. Enterprise (Transaction) Value / Sales - -1 and 3 only
-On January 1, 2014, shares of Company X trade at $6.50 per share,
with 400 million shares outstanding. The company has net debt of $300
million. After building an earnings model for Company X, you have
projected free cash flow for each year through 2020 as follows:
Year 2014 2015 2016 2017 2018 2019 2020
Free Cash Flow 110 120 150 170 200 250 280
You estimate that the weighted average cost of capital (WACC) for
Company X is 10% and assume that free cash flows grow in perpetuity
