Wall Street Prep Premium Exam Questions and Answers
1. What is generally not considered to be a pre-tax non-recurring (unusual
or infrequent) item?: Ans- Extraordinary gains/losses
2. what is false about depreciation and amortization: Ans- D&A may be
classified within interest expense
3. 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: Ans- a
decrease of 15 million
4. the final component of an earnings projection model is calculating
interest expense. the calculation may create a circular reference because:
Ans- 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
5. a 10-q financial filing has all of the following characteristics except: Ans-
issued four times a year.
6. 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: Ans- computers used by the accounting department
1/8
,7. 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%
8. 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
9. 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
10. Which of the following is true: Coca Cola's brand name is not reflected as
an intangible asset on its balance sheet
11. A company has the following information:
• 2014 share repurchase plan of $4 billion
• Average share price of $60 for the year 2013
2/8
, • 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
12. non-controlling interest: is an expense on the income statement and equity
o the balance sheet
13. 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
14. 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
15. 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
16. enterprise (transaction) value represents the:: value of all capital invested
in a business
17. A debt holder would be primarily concerned with which of the
following multiples?
I. Enterprise (Transaction) Value / EBITDA
II. Price/Earnings
1. What is generally not considered to be a pre-tax non-recurring (unusual
or infrequent) item?: Ans- Extraordinary gains/losses
2. what is false about depreciation and amortization: Ans- D&A may be
classified within interest expense
3. 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: Ans- a
decrease of 15 million
4. the final component of an earnings projection model is calculating
interest expense. the calculation may create a circular reference because:
Ans- 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
5. a 10-q financial filing has all of the following characteristics except: Ans-
issued four times a year.
6. 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: Ans- computers used by the accounting department
1/8
,7. 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%
8. 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
9. 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
10. Which of the following is true: Coca Cola's brand name is not reflected as
an intangible asset on its balance sheet
11. A company has the following information:
• 2014 share repurchase plan of $4 billion
• Average share price of $60 for the year 2013
2/8
, • 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
12. non-controlling interest: is an expense on the income statement and equity
o the balance sheet
13. 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
14. 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
15. 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
16. enterprise (transaction) value represents the:: value of all capital invested
in a business
17. A debt holder would be primarily concerned with which of the
following multiples?
I. Enterprise (Transaction) Value / EBITDA
II. Price/Earnings
