Transaction Comps Modeling
Wall Street Prep Exam
Comprehensive Practice Questions with
Answers
Academic Year: 2024/2025
1
, 1. What is generally not considered to be a pre-tax non-recurring (unusual or infrequent)
item?
- ANSWER-Extraordinary gains/losses
2. What is false about depreciation and amortization?
- ANSWER-D&A may be classified within interest expense
3. Company X's current assets increased by $40 million from 2007-2008 while the
company’s current liabilities increased by $25 million over the same period. The cash
impact of the change in working capital was
- ANSWER-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
- ANSWER-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
- ANSWER-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
- ANSWER-computers used by the accounting department
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?
- ANSWER-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
- ANSWER-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
2
Wall Street Prep Exam
Comprehensive Practice Questions with
Answers
Academic Year: 2024/2025
1
, 1. What is generally not considered to be a pre-tax non-recurring (unusual or infrequent)
item?
- ANSWER-Extraordinary gains/losses
2. What is false about depreciation and amortization?
- ANSWER-D&A may be classified within interest expense
3. Company X's current assets increased by $40 million from 2007-2008 while the
company’s current liabilities increased by $25 million over the same period. The cash
impact of the change in working capital was
- ANSWER-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
- ANSWER-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
- ANSWER-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
- ANSWER-computers used by the accounting department
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?
- ANSWER-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
- ANSWER-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
2
