Wall Street Prep Premium Exam:Transaction Comps Modeling Wall Stree
Prep Exam
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1. What is generally not considered to be a pre-tax non-recurring (unusual or
infrequent) item?: Extraordinary gains/losses
2. what is false about depreciation and amortization: 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: 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: 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: 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: 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?: 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
1/8
, Wall Street Prep Premium Exam:Transaction Comps Modeling Wall Stree
Prep Exam
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• 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
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
III. Enterprise (Transaction) Value / Sales: 1 and 3 only
18. 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 at 3.0% annually be-
yond 2020, the final projected year. Estimate the present value of the projected
free cash flows through 2020, discounted at the stated WACC. Assume all cash
2/8
Prep Exam
Study online at https://quizlet.com/_egpest
1. What is generally not considered to be a pre-tax non-recurring (unusual or
infrequent) item?: Extraordinary gains/losses
2. what is false about depreciation and amortization: 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: 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: 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: 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: 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?: 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
1/8
, Wall Street Prep Premium Exam:Transaction Comps Modeling Wall Stree
Prep Exam
Study online at https://quizlet.com/_egpest
• 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
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
III. Enterprise (Transaction) Value / Sales: 1 and 3 only
18. 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 at 3.0% annually be-
yond 2020, the final projected year. Estimate the present value of the projected
free cash flows through 2020, discounted at the stated WACC. Assume all cash
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