Behvairoal + Technical MS

If Enterprise Value is $150mm, and Equity Value is $100mm, what is net debt?

Net debt is a company's total debt minus the cash it has on the balance sheet. Since Enterprise Value = Equity Value + Net Debt + Preferred Stock + Minority Interest, if we assume there is no minority interest or preferred stock, then Net Debt will be $150mm - $100mm, or $50mm.

Which of the valuation methodologies will result in the highest valuation?

Of the four main valuation techniques (Market Value, Market Comps, Precedent Transactions and DCF) the highest valuation will normally come from the Precedent Transactions technique, because a company will pay a premium for the projected synergies coming from the merger. A DCF analysis will typically give you the next highest valuation simply because those building the DCF model tend to be somewhat optimistic in their assumptions and projections. Market Comps and Market Value will usually produce the lowest valuations.

Why do you subtract cash from Enterprise Value?

One good reason is that cash has already been accounted for within the market value of equity. You also subtract cash because it can be used either to pay a dividend or to reduce debt, effectively reducing the purchase price of the company.

describe recent transaction

One recent transaction that's interested me has been Verizon's plan to acquire Tracfone from america mobile in over $6 billion in cash and stock. Verizon, announced their plan to buy Tracfone, a prepaid wireless service provider earlier this month with 21 million U.S. customers. Just last year, Tracfone turned around $8 billion worth of revenue into an EBITDA of $646 million. In the past 2 quarters, Tracfone has also done over $4 billion worth of business and reported a total EBITDA of $429 million. I think, this acquisition will mutually benefit both Verizon and Tracfone where both businesses will see opportunities for growth. Verizon will be ahead of T-Mobile & AT&T in the prepaid consumer market, where Verizon can save about $800 million annually just by TracFone shifting its customers away from AT&T and T-Mobile. Further, 13 million of Tracfone's 21 million customers are already served by Verizon, providing an opportunity to convert these customers into more profitable postpaid users for Verizon. TracFone will also benefit from this transaction, where it will still remain a distinct business but will have access to a wider range of cellphones and products. TracFone could also get an additional $650 million in cash payments, bringing its total potential price to around $6.9 billion. I ultimately think this acquisition of Tracfone is brilliant on Verizon and Tracfone's part, where both will see growth and a rise in value, efficiency, and profit.

walk me through precedent

Precedents transactions you essentially look at other transactions in the past which involves comparable companies of similiar backgrounds, size and other factors. A precedent transaction analysis is based on the idea that a company's worth can be determined by looking at the prices paid for similar companies situations like an M&A of the past. Precedent transaction analysis creates an estimate of what a share of stock would be worth in the case of an acquisition. You look at what the EV/EBITDA and EV/Sales multiples paid then calculate a valuation multiple based on the sale prices in those transactions, and apply the multiple to the comparable metric of the company being valued.

raising debt vs equity

Raising debt is done by selling company bonds. Debt financing is done by an investor by lending money to the firm, for a certain period, at an interest agreed upon by both the parties. Debt is much less risky and cheaper for the investor because the firm is legally obligated to pay it. Also, If the company has taxable income, issuing debt provides the benefit of tax shields. You raise equity capital by selling a share of your business to an investor. Because the investor owns a portion of the business, he or she takes a share of the profits and you don't have to pay interest on a loan.

Pros and cons of precedent

Some advantages of this valuation technique include its reliance on public information (for many transactions) and its basis in reality, based on actual comparable deals that have closed in the past. However, market conditions at the time of the prior deal may be significantly different from those prevailing at the time of the current transaction.

synergy

Synergy is the concept that the combined value and performance of two companies will be greater than the sum of the separate individual parts.

What is the Capital Assets Pricing Model?

The Capital Assets Pricing Model, referred to as CAPM, is used to calculate the required return on equity or the cost of equity. The return on equity is equal to the risk free rate (usually the yield on a 10- year U.S. government bond) plus the company's beta (a measure of the stock's volatility in relation to the stock market) times the market risk premium.

cash flow statement

The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three key financial statements that report the cash generated and spent during a specific period of time. There are three parts to a cash flow statement. Cash from Operations (cash generated or lost through normal operations), sales, and changes in working capital. Cash from investing activities shows the cash generated or spent relating to investment activities. Investing activities include purchases of physical assets, investments in securities (stock, bonds, cash), or the sale of securities or assets. Finally, cash from financing is cash generated or spent on financing the business; may include proceeds from debt or equity issuance (source of cash) or cost of debt or equity repurchase (use of cash). Lastly would state the cash at end of the year. 1. operating activities --> net cash flow from operaitng activities --> investing activities --> net cash flow from investing activities --> financing activities --> net cash flow from financing activities --> cash at end of year

What is the appropriate numerator for a revenue multiple?

The answer is enterprise value. The question tests whether you understand the difference between equity value and enterprise value and their relevance to multiples. Equity value = Enterprise value - Net Debt (where net debt = gross debt and debt equivalents - excess cash). EBIT, EBITDA, unlevered cash flow, and revenue multiples all have enterprise value as the numerator because the denominator is an unlevered (pre-debt) measure of profitability. Conversely, EPS, after-tax cash flows, and book value of equity all have equity value as the numerator because the denominator is levered - or post-debt.

balance sheet

The balance sheet is a snapshot representing the state of a company's finances at a moment in time.A balance sheet reports a company's assets, liabilities and shareholders' equity. It can also be referred to as a statement of net worth, or a statement of financial position. The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity. This formula is intuitive: a company has to pay for all the things it owns (assets) by either borrowing money (taking on liabilities) or taking it from investors (issuing shareholders' equity). The balance sheet first displays the company's total assets, and how these assets are financed through either debt or equity. Then the balance sheet displays liabilities and shareholders equity. Shareholders' equity is the money attributable to shareholders and is also known as "net assets," since it is equivalent to the total assets of a company minus its liabilities, that is, the debt it owes to non-shareholders. 1. assets --> liabilities --> shareholders equity includes: -Property, plant, and equipment (PP&E) are long-term assets vital to business operations and not easily converted into cash. Property, plant, and equipment are tangible assets, meaning they are physical in nature or can be touched. -Retained earnings (RE) is the amount of net income left over for the business after it has paid out dividends to its shareholders. Retained earnings are actually reported in the equity section of the balance sheet. Although you can invest retained earnings into assets, they themselves are not assets.

What is typically higher - the cost of debt or the cost of equity?

The cost of equity is higher than the cost of debt because the cost associated with borrowing debt (interest expense) is tax deductible, creating a tax shield. Additionally, the cost of equity is typically higher because unlike lenders, equity investors are not guaranteed fixed payments, and are last in line at liquidation.

Why might two companies with similar growth and profitability have different valuations?

The difference in valuation could reflect some sort of a competitive advantage that isn't represented on the financial statements. Perhaps the more valuable company is a market leader in a key region or owns uniquely valuable intellectual property or enjoys a significantly stronger management track record.

income statement

The income statement shows the performance of the business throughout each period, displaying sales revenue at the very top. The statement then deducts the cost of goods sold to find gross profit. Gross income is the amount you earn before taxes and other payroll deductions. From there, the gross profit is affected by other operating expenses and income, depending on the nature of the business, to reach net income at the bottom - "the bottom line" for the business. Net income is your total income after taxes, deductions, credits, and business operating expenses. -top to bottom: sales --> cost of goods sold --> gross margin --> operating expense --> operating income --> other income & expenses --> net income found for given time period EBIT: EBIT is also referred to as operating earnings, operating profit, and profit before interest and taxes.

Why are companies like Facebook, Twitter, and Instagram receiving multi-billion dollar valuations?

The key here is that investors are anticipating extremely high future earnings for these businesses due to their reach and growth trajectory, so investors are less focused on present revenues and margins. Investors believe that Facebook and Twitter will, in the future, be able to tap into the earning power of their millions of users in some way that isn't currently happening.

merger to know: Canadian energy deal deal creates Midwestern refining giant amid uncertain demand

The merger of Canadian oil companies Cenovus Energy and Husky Energy will create presence in the Midwestern United States, but it comes at a time when weak demand has left that market oversupplied. Pandemic travel restrictions have hurt fuel demand and spurred companies to cut costs or merge. With infections surging again, consumption of gasoline and diesel could remain weak, hurting refinery profits. Cenovus's CVE.TO C$3.8 billion ($2.9 billion) purchase of Husky HSE.TO, announced on Sunday, is aimed at lowering operating costs and making it more resilient to low prices. In the Midwest, it will give Cenovus an additional 350,000 barrels per day (bpd) in total refining capacity. The region's refineries can process more than 4 million bpd, the second-most of five U.S. regions behind only the U.S. Gulf Coast, but analysts questioned the rationale for the deal. U.S. fuel demand is expected to fall to 18.2 million bpd in 2020 and rebound to just under 20 million bpd in 2021, but that's still short of 2019 levels. Cenovus shares closed down more than 8% on Monday. The company's combined 660,000 bpd of North American refining capacity is expected to more than match Cenovus' Alberta heavy oil production, but the supply of heavy crude still outweighs demand in the region. "Husky has struggled to make these (refineries) profitable and we believe in the near-term these fundamentals will remain challenged," Credit Suisse said in a note.

walk me through comps

The process is looking at comparable public companies in the same industry, geography, and of relatively similar sizes so we can have an approximate benchmark as to what their values or multiples should be trading at. -Some commonly used multiple is Enterprise Value/EBITDA, Price/Earnings, EV/Sales, and more. -Comparable Company A is trading at an EV/EBITDA multiple of 6.0x, and the company you are valuing has EBITDA of $100 million; your company's EV would be valued at $600 million based on this valuation technique.

Why do you project out free cash flows for the DCF model?

The reason you project FCF for the DCF is because FCF is the amount of actual cash that could hypothetically be paid out to debt holders and equity holders from the earnings of a company.

what is terminal value?

The terminal value is the present value of all future cash flows even when they are not considered in a particular projection period. It captures values that are otherwise difficult to predict using the regular financial model forecast period. There are two methods used to calculate the terminal value, the terminal muliple method and the perptuity growth method.

How are 3 main financial statements connected?

The three main financial statements show separate views, and together they create a whole picture of a company's financial health. For example, the Income Statement closes with a net income figure that appears on the Cash Flow Statement as an addition to cash flow from operations. The Cash Flow Statement's beginning cash balance comes from the Balance Sheet for the prior period. The Cash Flow Statement's ending cash balance becomes the cash asset on the current period's Balance Sheet.

How would you value a company?

There are a number of ways I can think of to value a company, and I'm sure you know even more. The simplest is probably market valuation, which is just the public Equity Value of a company based on the public markets. To get the Enterprise Value, you add the net debt on its books, preferred stock, and any minority interest. A few other ways to value a company include comparable company analysis, precedent transactions, and a discounted cash flow.

All else equal, should the cost of equity be higher for a company with $100 million of market cap or a company with $100 billion of market cap?

Typically, a smaller company is expected to produce greater returns than a large company, meaning the smaller company is more risky and therefore would have a higher cost of equity.

How/Why do you lever or unlever beta?

Unlevering beta allows one to remove the debt effect in the capital structure. This will show you the risk of a firm's equity compared to the market. Also, if you are trying to do a market comparison with a company that's not on the market (so no beta), you can take a comparable company and unlever its beta as a proxy for the unlisted company's beta.

What is valuation and what is it used for?

Valuation is the procedure of calculating the worth of an asset, security, company, etc. This is one of the primary tasks that investment bankers do for their clients. Investment bankers are hired to value a company, often in the context of purchasing another company, selling itself or divesting a division.

When calculating Enterprise Value, do you use the book value or the market value of equity?

When calculating a company's Enterprise Value, you use the market value of the equity because that represents the true supply-demand value of the company's equity in the open market.

All else equal, should the WACC be higher for a company with $100 million of market cap or a company with $100 billion of market cap?

Without knowing more information about the companies, it is impossible to say. If the capital structures are the same, then the larger company should be less risky and therefore have a lower WACC. However, if the larger company has a lot of high-interest debt, it could have a higher WACC.

Could a company have a negative book Equity Value?

Yes, a company could have a negative book Equity Value if the owners are taking out large cash dividends or if the company has been operating for a long time at a net loss, both of which reduce shareholders' equity.

statement of cash flows ending cash formula

beginning cash + CF operations + CF investing + CF financing

what are 2 companies that should merge?

gap & peloton. gap has excitign new things comign with kanye west and yeezy clohing whcih could appeal o consumers lookign for higher end brand. traditonally, pelton appeals to consuemrs who are of hgiehr icnome as bokes are expesnivee. during covid, pelotton has been able to profitt aoff of qurnein wiht no gyms, but tno for future hey shoudl have a new plan so they can further grow and develop a moat in their space. by mereging witht gap, tehey can produce clothignt ttha can be more affordable to consumers who are lokingf for less epxnesive brand but can sil mantain heir highe nd brand. generally yeezy a clohig bran by kanye is a new fashion hgihly valued.

assets formula (on balance sheeet)

liabilities + shareholders' equity

lowest to highest:

lowest is market valuation: based simply on how the target is being valued by the market. Just equity value, no control premium or synergies next is market comps: based on other similar companies and how they are trading in the market. No control premium or synergies. DCF: Those building the DCF model are frequently optimistic in their projections. precedent transactions: Since a company will pay a control premium and a premium for synergies coming from the merger, values tend to be high

terminal growth multiple rate vs perpetuity rate

more accurate: The terminal multiple method has a defined projection period. It also greatly considers market-driven information, as compared to the perpetuity growth model. less accurate: The perpetuity growth model assumes that cash flow values grow at a constant rate ad infinitum. Because of this assumption, the formula for a perpetuity with growth can be used. The perpetuity growth model is harder to accurately use.

how wil hedgefund help you in IB and why iB as opposed to hedgefund?

more teammwork in ib, get to work closer with companies and get wider expsosure to rasnactons, iB is fastter paced environment --> i am mmoivated and invirogarted by fast pace environemn

one mornign bew article

nasa released news they have found water on moon which can help project artmis (Sustain human prscne on moon by 2028)

describe recent ipo conttinued from what's going on in market

on a moree global scale, Q3 2020 bucked the traditionally slow IPO period where YTD IPO activity accelerated, resulting in a 14% increase in the total number of IPOs. in terms of recent IPO acivity, most notably Chinese financial-technology giant Ant Group Co. is set to raise at least $34.4 billion from the world's biggest-ever initial public offering which will be huge for the HK and shanghai sttock exchanges whcih will onyl add to china's capital markets which has seen a recent boom in share sales ecord proportion of global initial public offerings and companys seeking lisitngs closer to home. Ant is seeking to raise about $17.2 billion in each city, Those sums would eclipse the $25 billion raised in 2014 by its former parent Alibaba Group Holding Ltd. and the $29.4 billion of shares sold more recently by Saudi Aramco, in what is to date the largest-ever IPO.. Jack Ma, who controls Ant, said over the weekend the IPO will be "the largest in human history." Speaking at a financial forum in Shanghai on Saturday, he said: "This is the first time that such a big IPO was priced outside of New York City, which we wouldn't have dared to think about five, or even three years ago." In a few years, Ant has helped change how people in China spend, borrow, save and invest. Hong Kong stock will start trading on Nov. 5, according to a filing with that city's stock exchange. Although Ant didn't provide a Shanghai listing date yet, it is expected to be on the same day. Ant has already finished selling shares in Shanghai, with 80% of the offering going to so-called strategic investors, who will commit to hold the shares for at least 12 or 24 months. Chinese stock markets are outshining global peers, aided by the country's economic recovery as the first in and first out of the coronavirus pandemic. The benchmark Shanghai Composite has advanced about 9% this year. That makes a listing more attractive for China's growing ranks of large, unlisted companies. A second catalyst has been the STAR Market, which launched last year. It is free from some of the constraints that usually apply in mainland Chinese markets, where there are unwritten curbs on valuations and where applicants can wait years for official approval before going public. Meanwhile, the threat of U.S. delistings and revamped listing rules are encouraging some Chinese firms with American shares to go public in Hong Kong. "Homecoming listings allow Chinese companies access to new investors who find it difficult to invest in the U.S. market," said Craig Coben, co-head of Asia-Pacific global capital markets at Bank of America. It is also a chance to change broader investor perceptions, Mr. Coben said. After years listed in the U.S., companies "have evolved, in many cases they've improved, and they may want to reposition themselves with investors," he said. this will onyl weaken u.s. markets and srenghtn the chinese marke.t

trupanion situational overview (can also do zoom)

one situational overview of a company I read in their stock report that I found interesting was Trupanion: A surprising fact: 25% of dogs and cats in UK are insured but only 2% in US! The CEO of Trupanion saw this discrepancy as a huge opportunity and found some initial success in Canada with his UK-type value proposition for pet owners. He relocated his company in Seattle to expand into the US. As dogs and cats are treated more and more like family members, Trupanion is betting that more and more people would prefer to eliminate the cash-flow problems caused by unexpected surgeries and other expensive interventions that are needed by their beloved pet from time to time. It uses machine learning to continually fine-tune its insurance premiums (precisely what to charge a 3- year old Bulldog in Manhattan so that the owner is pleased and Trupanion makes money on the average). They also install their own payment software at the animal hospital so that they can pay the vet within minutes of a pet's visit, something most vets really appreciate. They are rolling this out across all 28,000 veterinary hospitals across the country to win them over as their primary sales referral channel. We think there is a very good chance that Trupanion will be able to create a formidable moat around the vet channel and replicate the European model in the US (40% of dogs and cats in Sweden are insured). If they succeed, their current 0.22% market-share of insured pets has a massive potentially available market, one that is 50x to 100x their current size. We recently added TRUP to our portfolio. Incidentally, both Redfin and Trupanion CEOs hold up the same Seattle neighbors - Amazon, Costco, and Starbucks - as role models for long-term thinking, data-driven flywheels and customer-centricity.

DukeWeb is a small Internet access provider, with $10 million in annual revenues. DukeWeb is considering acquiring another small Internet access provider in nearby North Carolina. What would you advise DukeWeb to do?

precednets transaction analysis

net income formula

revenues - cost of goods - expenses

greatest accomplishment

sister ed thing or amount i have done at duke

what are future goals?

trying to learn more more about finance and the world: how to understand a company, how to put company in context of changing world, how to analyze it against other competitors -going to learn/ be introduced on forma of investment memorandum where i will utilize previous skills of wiring memo but instead writing about a company -will use information found in past stock reports to get basic understanding of excel and how to create a graph -be able to overall expand analytical abilties when it comes tto looking at a comapny whether it be in research stage of situational overeeview, or graph creation and valuaiton in technical skills, or being able to present information concisely in a stock report and present to hedgefund managers and be able to back up claim

how will trump vs biden win affect market and how will stimulus package affect market?

very volatile in short run, esp cause we could not know who president is for a while, stitmilair to bush vs gore relciton in 2020 market plummetted because investors didnt know what was going on but imrnat to note presidential election does not have huge impact on long run, will just need to pass a sittmulsu is main priory/goal biden: good for renewable energy sttocks, could be bad for big tech stocks where they would be hihgly taxed and already mamny anti-rust laws against corporations liek google and apple, and if there was a blue wave where democrats woudl take control of the house adn regain cotnrol fo seenate plsu white house, enformcemtns on antirstur coudl icnrease, higehr corpaote tax so larger businessees would have to pay larger taxes --> but also would try to pass larger stitmulsu deal specifically for unemployment benefits which could icnrease GDP and consumer spending trump: would try to pass a larger stimulus deal aimed at helping small busineses and airlines, if stimulus put tin ther ocnumser speaning can also increase and GDP can grow, mor about putting america first and natitonasim and protecting american workers interest first so focus companies fproucign things perhaps within the us economy so look at defense, retial, idnsutrials, manfucatuirng spcae so those companies wil prabbyl continue to benefit and win --> trump admin has also said will try to not stop pandemic but will try to comme eup with vaccine, lots of money can be pied into pharemctical biotech commapnies and woldb less quarnetine orders which reatil stores woudl benefit and thtink like grocery stores would maybe not ebenfit like kroger or Kellogg or targe cause more would go to restaruants if it is split is biden wins and congress stays split it might make it more oredictable markeet so invstors could like that, less volaitlity and much expectiatns that there woudl be this gridlock and traiodtnal rguemns lik eover sittmulsu package etc. When gov/congress approves stimulus package some of money wil be go into helping business those businesses use capital to pay employees to perhaps order raw material sto make products or deliver services so one way of directly stimulating economy, is itt gonna be tech, restaurants, industrials? All of the above, it can help teach some eof money will be as a relief payment american struggling so they get that direct payment and check s what are they gonna do some will invest in own educational buy online courses those r e online platforms some will pay rent some will buy food and products will impact so many companies and industries

what have I done in hedgefund so far and what have i learned?

what ive done so far: --> I only started working a week ago so have not been able to do much yet but I know this will be a great learning opportunity. I get to learn a lot and work with smart people, and i think this is a great experience especially entering IB. -Main thing ive done is ive started reading their quarterly and yearly reports where i have learned what type of companies they like to invest in and how they have done well with covid what ive learned so far (what they specialize in andhow they have been able to do during covid) 1. I've learned they specialize in investing tech & software companies because they believe "software eats the world" and have noticed that companies with software edge tend to scale particularly well (like tracfone) 2. I've been able to learn how they have been doing during COVID. First, learned they have donee very well and outperformed market. 2nd quarter was best quarter ever where itt gained +60.2% for Q2 and is now up +45.5% net year-to-date. The S&P 500 is up 5.6% YTD as of this report release. They have been doing well because of tech stocks. They also outlined consumer changing preferences like tech stocks that are able to be environemntally sustainable. Also cool to hear why they would not invest in zoom. Really cool to learn about. (ex; Docusign eliminates paper, Visa & Mastercard replacing paper money with software transactions, Video-conferencing tools by Twilio and Google are reducing air-travel, a significant source of pollution 3. Reading though reports it's been great learning experience to see how how they approach a situational overview of a company. A lot of their situational overview is understanding the moat they have or software edge in their space and understanding the space as well. also understanding it's future prosepcts and why it would be able to beat competitors. -They tend to reposition their portfolio around "digital snowballs" - companies with a software-based edge, a loyal customer base ("sticky snow"), and a huge market in which they can reinvest and compound their profits ("a long hill to roll down"). -Since starting in 2008, they have had giains of 16.2% returns while S&P has had 11.6% returns, witthing the last 5 years, best quarter ever It gained +60.2% for Q2 (net of all fees and expenses), and is now up +45.5% net year-to-date. The market recovered from its panic plunge earlier and the S&P 500 gained +20.5% in Q2 - learned different steps to stock analysis is a situation overview, then performing technical skills then creating a price target / investment thesis/memo --> i am in stage of learning what a situation overview through reading quarterly reports, talking to him, and viewing a webinar (situation overview, company description, industry competition, fast/slow growth, restructuring, recent quarterly earnings)

what is one area of market you would invest in?

zoom: 376

tell me about BMC

#3- Forecasting GDP Analysts often publish the likelihood of the performance of economic indicators. Though not precisely in its nature, these estimates are often based on simulated economic models, which provide a general overview of how the economy is likely to perform shortly. Investors try to assess the mood of the economy based on how pessimistic or optimistic are prevailing indicators plus the future assessments of leading experts. This helps them identify possible inflection points and base critical economic decisions on them.

interesting wsj journal

-As Covid-19 Sweeps Europe, One Country Tries to Test Everyone: everyone above age of 10 and below 65 has to get tested or else they face fines and mandatory isolation, has already worked for a city in china -Pakistan Drops TikTok Ban After App Pledges to Police Content -Thailand Withdraws Emergency Decree to Defuse Youth-Led Protests

Name major factors that drive M&A activity (mergers and acquisitions)?

-Create synergies and save on costs -Acquire new tech or product pipelines -Grow share in the market by removing a competitor -Buying a supplier or distributor to increase supply chain pricing power -Improve financial metrics and numbers

Why would a company issue equity rather than debt to fund its operations?

-If the company feels its stock price is inflated they can raise a large amount of capital compared to the percentage of ownership sold -If the projects the company plans to invest in with proceeds may not produce immediate or consistent cash flows to pay debt -If the company wants to adjust cap structure or pay down debt -If the owners of the company want to sell off a portion of their ownership

what is new going on with MS recently + one recent deal

-James gorman CEO -recently added diversity + inclusion to 5 core values -Morgan Stanley beat analysts' estimates for third-quarter revenue and profit, fueled by better-than-expected results from the firm's Wall Street trading operations -The bank said Thursday in a release that profit jumped 25% from a year earlier to $2.72 billion, or $1.66 per share, exceeding the $1.28 estimate of analysts surveyed by Refinitiv. - It generated revenue of $11.7 billion, 16% higher than a year earlier and a billion dollars more than the estimate. -Morgan Stanley, which has been Wall Street's most aggressive acquirer with $20 billion in takeovers this year, as it looks to transition from a longtime investment banking powerhouse into a more diversified company with stronger earnings power in any kind of economy --> Last week he announced that his bank is acquiring Eaton Vance for $7 billion, adding heft and scale to the smallest of the bank's three main businesses, investment management. In February, he announced the $13 billion takeover of discount brokerage E-Trade. -We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns," CEO James Gorman said in the release. -Shares of the company climbed 1.3%. Morgan Stanley shares are almost unchanged this year through Wednesday, outperforming the more than 30% decline of the KBW Bank Index.

what have been recent international events you have been keeping up with?

-china vs us tradewar -https://www.wsj.com/articles/countries-try-shorter-covid-19-quarantines-in-bid-to-boost-compliance-11603791001?mod=hp_lead_pos7 -south korean eocnomy reurns to growth -look at oil + what is happenign with cease fire and in venezuela, what happened witth russia and saudia arabia -european eocnomy is stallign witth increease in covid cases -pomepeo totuts u.s. india defense deal -strign of tense votes tes africa;s democracies -Russian Airstrikes Kills Dozens of Turkey-Backed Fighters in Syria, Rebels Say -Thailand Withdraws Emergency Decree to Defuse Youth-Led Protests -pakistan Drops TikTok Ban After App Pledges to Police Content

every story in chronological order

-why duke story (basketball) -amazon river story -Wall Street class story -example of time you saw connection with latin -skiing went down tree trail stuck with sister had to stay positive (took risk as well) -ROTC theatre + AIA -shake break + motive through food (shake break) - sister eating disorder project heal -ancient greek not smartest in room -tennis partner mad at me had to stay positive -motivate tennis team -project care f*g ethical decision -LHS budget + fashion show -adopt from high school to duke culture -pub pol 155 memo mess up -tutor girl did not like me -pub pol 301 produce story -tented with people for basketball, was hard to do work because some people wanted to have fun in tent others didn't (pitched idea to make a study tent with good lighting --> no one wanted to step up I did) -public speaking swich ted talk pressure/difficult -love to cook, did a lot during quarantine kept me busy (read recipe, gather supplies, go to grocery store, cook, eat with family) -motivate to run half marathon during quarantine and did it with dad, woke up early on Father's Day and surprised him -disappointed/had to adopt BUILD institute was (helped during challenging time, , took initiative taught myself CRM, pitched office hours idea, organized spreadsheet + advocated/market for company) -BOW Instagram story -BOW ethical entrepreneurship event (stepped up as leader) -BOW slideshow to get to know + texted everyone -DMC the coop marketing strategy -I&E class suggested use chairs one per table a wire -I&E social entrepreneur class too attention to detail failed to miss bigger picture -DIRA noticed from personal experience only way to write was to be in club talking with friend, we pitched this idea --> got idea from morning brew + classics combined -hedgefund outreach -roommate alarm tone story -this semester managing time (walk to class do work, many classes)

What is WACC and how do you calculate it? What is the appropriate discount rate to use in an unlevered DCF analysis?

. WACC is the acronym for Weighted Average Cost of Capital. It is used as the discount rate in a discounted cash flow analysis to calculate the present value of a company's cash flows and terminal value. It reflects the overall cost of a company's raising new capital, which is also a representation of the riskiness of investing in the company. Mathematically, WACC is the percentage of equity in the capital structure times the cost of equity (calculated by the Capital Assets Pricing Model) plus percentage of debt in the capital structure times one minus the corporate tax rate times the cost of debt—current yield on outstanding debt—plus percentage of preferred stock in the capital structure times the cost of preferred stock if there is any preferred stock outstanding. Since the free cash flows in an unlevered DCF analysis are pre-debt the cost of the cash flows relate to both the lenders and the equity providers of capital. Thus, the discount rate is the weighted average cost of capital to all providers of capital (both debt and equity).

what is going on in market

.-markett has been very volatile recently --> thee uncertaintiy of covid has broguht a new era of volaitiliyy, where we have seen a shift in consumer preferences. recently, theere has been a renewed outbreak in covid cases in the U.S. which has added worry about the economic outlook after congress and White House have made limited progress on a much-anticipated fiscal stimulus deal. without a renewed fiscal stimulus deal and a resurgernce of covid cases, consumer preferences have changed where the tthe airlines industry has been greatly hitt. travel and leisure stocks that have come under the most pressure this year during the pandemic and will coninue to be hit if no stimulus is provided. if no sitmulus is provided, then the airliens industry willc ontinue to struggle a lot and layoffs willc ontineu which will only increase he unemplyoment rate. this is bad becasue consumer spneidng and overall GDP will decrease, where U.S. retail indsutries which was already hurting form stores being lcosed down and a shfit in cosnuerm referencce to e-commerce will be eeven further. this past recent quarter, GDP is expected to increase 30% where retail sales have increased about 1.2% and economy has been able to bring back 4 million jobs after a period of large unemployment,. Economists we trust think that the economy cannot recover fully until the medical crisis is over. This can only happen when mass vaccination becomes available. We have no idea how long that will take. Previous vaccines took four years or longer to develop, although it could be quicker this time. Scientists, working at an unprecedented pace, are sharing results instantly across the globe on the internet, and genetic techniques have improved. Yet a critical bottleneck - human testing - cannot be compressed. We are worried about the rise of re-infections from the premature opening of economies and large-scale tragedy in the dense and poor cities of Brazil, India, and Mexico. As we have just witnessed, in our tightly interconnected world, an epidemic anywhere can quickly turn into a pandemic everywhere.

Why MS?

1. First and foremost, the people are what make the bank, and from talking to people at MS, it's clear the people are not only super smart, but also truly care about you and are willing to go above and beyond to help. For background, my interest in investment banking started with Eli Gross, a good friend of mine, who I really respect a lot. He has been kind of enough to constantly take the time to help me understand the role of an analyst and the culture of collaboration, diversity, and growth at Morgan Stanley. I've also been able to talk to many more MS people and from the MD to analyst level I know Morgan Stanley's value of collaboration and helping others succeed is a good cultural fit for me, where I will truly feel like I am supported and can learn a lot in this environment where peopelr really care aboutt helping me adn heelping me grow. 3.. Next, Morgan Stanley promotes a sense of genuinely good values which align much with mine. Specifically, Morgan Stanley's recent addition to their 5 core values of Committing to Diversity and Inclusion is really important to me. I think diversity of thought and people is really important in boosting moral and innovative thinking. Further, Morgan Stanley's International Foundation focusing on children's health and education programs to support them with necessary resources is an amazing initiative to me. This really tells me that Morgan Stanley tries to not only make an impact within the bank but also with people the bank interacts with on a global scale. The fact that Morgan Stanley uses its large platform to support such amazing values tells me Morgan Stanley values values human growth and success within the bank and outside of it. 2. Lastly, I have heard that Morgan Stanley always empahszies giving honest advice that pus clients interests fistt, even if it menas sometimes losing out on deals tto comeptitiros. A lot of times, I understand insiutions will tell a potential colient soemthign even if it is not something they necessarily believe in. However, MS values client's interests frist and forems and this tells me that MS has this culkture of just doing the right thing. I want to work at a bank that I know is putting our client's bes interests first and values this level of honesty, which is a value i respoec a lot and i woudl want to work at MS where the bank attracts this ype of culture. So ultimately the people and the culture fit, the emphasis on high qualittiy results and doing good by teh client, and inaitives liek promoting diversity growth is really importantt tto me.

Why Duke/what is culture of duke like?

1. dad did residency at duke so grew up watching duke in march madness (duke similiar to MS being first bank i was familiar with) I remember watching duke win in 2010 championship and i remember seeing how fun and spirited looked the school and people 2. as I progressed and started to look into duke, i saw it wasnt only this type of passionate energy when it came to basketball but also to school and leearnign about things they loved, learned of amazing alumni strong network, heard of culture work hard play hard where there was this pre-professional environemtn espeically regarding clubs --> knew duke would have a strong alumni network passionate about school & have great opportuntities to be a part of clubs which helped you in real job, wanted this experience 3. people want to have fun and work hard, people literally tent out in freezing cold for 8 weeks while having work + they manage to do work + have fun 3. very similiar to MS, duke filled wih vibrant, spirited people who are not only passionate about basketball but also passionate, hardworking, and willing to help about learning more and pushing yourself --> there's this type of comeptitive environemn where eveyroen wants to push themselves to grow and others

what skills help you as IB analyst? what are your stregnths?

1. love learning more/desire to learn and challenge myself: I know IB requires long hours and I am willing to put in hard work, I think my past really shows my drive to push myself and challenge myself to learn more and put in the long hours --> whatever challenge I take I put the hard work in put extra hours in because I love to learn more (BUILD, DIRA, ROTC) 2. my people and team working skills --> when you are on job you are working long hours and working with clients, you will want someone who brings positivity and energy to team and who is enjoyable and truly cares about you (ex: BOW took time to get to know team, suggested we have day we jus make ppt about ourselves and get to know everyone, also everyone seemed very stressed out cause of finals and i reached out to everyone making sure they are 3. good at multitasking and handling many things at once, I have even learned how to become more efficient and organized by doing this: important for IB because I will be doing many things at once and will need to stay organized and have little room for error (ex: this semester taking 6 classes semester + finance recruiting + working on DIRA + BOW projects + starting work with hedgefund, dont have a car, living with 3 friends in apt), I have manage to stay organized with calandar app Planner Pro and i even have learned to be more efficient by making use of my 30 min walks to class by taking network calls which are hard to do when roommates are there

stock analysis steps

1. performing due dilligence (look at company business model and comapny story --> specific steps includae situation overview, company descripttion, industry competittion, fast or slow growth, turnaround/resurcturing, looking at past quarterly reports, understanding future things have in store) 2. technical skills/stock analysis (financial model/futture expectations assumptions & valuatiton methodologies --> continue growth, slow down or negative grwoth, overvalue, undervalue) (get info from capital iq or Bloomberg or 10Q in Edgar) 3. investtment thesis (investment thesis & risk --> create a price target/potential return, recomendation, catalyst, management execution, general economy, competition, regulation)

how do you keep up with market?

1. read morning brew every morning, read WSJ every night 2. keep a finance journal of things of 3 important things that have gone on in market 3. every night speak to my dad about it

what are some finance news you have edited for DIRA?

1. really intersting read aboutt how Chipotle was one of the first brands to launch a presence on TikTok. In a little over a year, the brand has launched five campaigns that have led to more than 1M followers and billions of impressions. The emerging GenZ platform has helped drive two top digital sales days and connected the brand to its GenZ target audience 2. I perseanlly wrote peicce paralleling ancient weapon laws to modern day gun laws and how it aually helped further ancient roman and athenian economy advance 3. Soccer, in many ways, is both a reflection of and can lead to a paradigm shift in its society. Furthermore, prominent and elite soccer players have a substantial influence over their followers. The studies of Mesut Özil of Germany and Mohamed Salah in the United Kingdom encapsulate how well-known Muslim soccer players lead to a much-sharpened understanding of the integration of Muslims. Both studies showed that while there are periods of decline and Muslims are still judged differently in contrast to other groups, these athletes have contributed to progression in Muslim acceptance. The evidence shows that increased familiarity with Muslims has led to the normalization in the treatment of them as people, while simultaneously giving more opportunities to the previously socially disenfranchised Muslim community living in Western Europe. --> really intersting never thtought of soccer that way, has helped muslims scuceed ifnancially in wesenr europe 4. read article on girl from india from her preerscpcegive her havign tik ttok b/c american phone whil ebannd in india

questtiosn to ask during superday:

1. what has been your favorite aspect about working in your group and what is the community like within it? 2. what has been the most challenging part of your job during covid & how did you mangae to adopt? 3. how has your role changed from the time you started with MS to now? 4. where do you get to be creative on the job? 5. morgan stnatley just added 5th core value of diversity, have you seen any changes in culture/impact of this? 6. what are some community building events withtin your group? 7. how has the reecent market volatility and uncertainty affected your job? 8. what has been one of hte most chllenging things about your job and how jhave you overcame it? 9. how can i contineu to build the skills needed for a carreer in ib or fiannce in my timee at duke or in free time? 10. What are some of your personal interests/hobbies? 11. Is there anything I've said that makes you doubt I would be a great fit for this position? 12. why do you think MS has been able to do so well in recent quarters and espeically why do oyu think it has been able to fare well during covid where many banks have not? 13. how do you manage stress? 14. how do you manage risk? 15. what is relaitonship like with analysts, vps, mds? 16. what is onee thing you wish you knew if you were in my position>

What is the difference between the Income Statement and Statement of Cash Flows?

A company's sales and expenses are recorded on its Income Statement. The Statement of Cash Flows records what cash is actually being used during the reporting period and where it is being spent.

strategic vs financial transaction/buyer

A financial buyer is a type of buyer in an acquisition that is primarily interested in the return that can be achieved from the purchase. A strategic buyer generally has the expertise necessary to operate the business and might acquire a company because that company has a superior distribution network or has products or geographic territories that are complementary.

what is an M&A?

A merger occurs when two separate entities combine forces to create a new, joint organization. Meanwhile, an acquisition refers to the takeover of one entity by another. Mergers and acquisitions may be completed to expand a company's reach or gain market share in an attempt to create shareholder value. Mergers and acquisitions are the important process in the banking industry to make financial gains enormously. Main aim of merger and acquisition in the banking sectors is to improve the economies of scale. A merger means combination of two companies into one company. ... On the other hand acquisition means takeover. (Verizon acquiring tracfone and i thtink lulu and gap should merge)

P/E ratio

A ratio useed to evaluate if a company is over or under priced. It represents the share price/earnings per share. In short, the P/E ratio shows what the market is willing to pay today for a stock based on its past or future earnings. A high P/E could mean that a stock's price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings.

EV/EBITDA multiple

A very common valuation methodology is the EV/EBITDA multiple, which estimates the Enterprise Value of a company using a multiple of its EBITDA.7 An EV/EBITDA multiple is probably the most commonly used "quick and dirty" valuation multiple used by investment banks, private equity firms, hedge funds, etc.

Why ib?

After talking to a number of people in the banking industry and doing my own research, there are three aspects of banking I find particularly appealing. First, when you think of IB similar to my time at Duke I would get to wok with the most hard working and intelligent people in a. team oriented setting. I understand that in IB you work in small teams and the opportunities to grow, learn a lot, and gain mentorship Fromm these highly intelligent people is an exciting opportunity because I would hone in on the technical and soft skills and grow as a collaborater and thinker. Second, I understand in IB you are helping advise companies and are gaining exposure to many transactions. As someone who likes to make a lot of connections to things that I am learning to what is going on in the world around me, exposure to this level of high-work in a fast paced and stimulating environment is something really appealing to me. Further, this environment of learning a lot about different deals in a fast-paced setting is something that aligns a lot with my time at duke, where I have really been challenged to learn a lot in a fast pace, and I know working in investment banking will be a continuation of my time at Duke. Lastly, the abilitty to learn more about finance and develop analytical skills is unmatched. Analytical skills are undoubtedly the most important skill set for anything in life, and I know I will really be able to build upon really important analytical skills in a short period of time from the analyst level and upwards. Being able to develop such important skills at even an analyst level from building spreadheets, to creaing stokc piches, tto doing research and working on fincancial models is truly an unparalleld way to learn. Overall, I'll be gainign exposure to some really intersitng deals, I'll be workign with the hardest and brighest peoplee much like my time at Duke, and I will be really able tot expand my analytical skills, adn this is hwy investmtentt banking is so appealing to me. The opporutnity to learn in every aspectt is unmattched and I could not be more excited and motivated to be enetering in any other careeer path.

what is LBO analysis

An LBO is when a firm uses a higher than normal amount of debt to finance the purchase of a company. The investors will purchase the equity of another company, using a percentage of its own capital and financing the remainder with debt through bank loans, bonds, or a combination of the two. The PE firm then uses the cash flows from the acquired company to pay off the debt over time with the goal of increasing the value of their equity.

How could a company have positive EBITDA and still go bankrupt?

Bankruptcy occurs when a company can't make its interest or debt payments. Since EBITDA is Earnings BEFORE Interest, if a required interest payment exceeds a company's EBITDA, then if they have insufficient cash on hand, they would soon default on their debt and could eventually need bankruptcy protection.

How do you determine which valuation methodology to use?

Because each method has unique ability to provide useful information, you don't choose just one. The best way to determine the value of a company is to use a combination of valuation techniques. For example, if you have a precedent transaction valuation that you feel is extremely accurate, you may give that result more weight. Or if you are extremely confident in your DCF analysis, you will place more emphasis on its outcome. Valuing a company is as much an art as it is a science.

When looking at the acquisition of a company, do you look at Equity Value or Enterprise Value?

Because the acquiring company must purchase both liabilities and equity in order to take over the business, the buyer will need to assess the company's Enterprise Value, which includes both the debt and the equity.

What is Beta?

Beta is a measure of the volatility of an investment compared with the market as a whole. The market has a beta of 1, while investments that are more volatile than the market have a beta greater than 1 and those that are less volatile have a beta less than 1.

What is a DCF/walk me through:

DCF essentially values a company based on the present values of its intrinsic free cash flows and the present value of its terminal value. 1. Project out cash flows for about 5 - 10 years (by using the equation EBIT - taxes + D&A - capital expenditures - change in working capital). 2. Discount these cash flows to account for the time value of money using WACC to determine the "present value" of cash flows at the appropriate discount rate. WACC= Cost of debt times % of debt (1- tax rate) + cost of equity times % of equity + cost of preferred equity times % of preferred equity. 3. Determine the terminal value of the company to predict the value of the company/assets for the years beyond the projection period (5 years). There are 2 ways to find the terminal value either Gordon Growth (also called Perpetuity Growth) method or the Terminal Multiple method. Is using perpetuity growth rate, you must choose an appropriate rate by which the company can grow forever like a long-term expected inflation rate. To calculate terminal value we multiply the last year's free cash flow (year 5) by 1 plus the chosen growth rate, and then divide by the discount rate minus growth rate. 4. Discount the terminal value to account for the time value of money using the WACC. 5. Sum the discounted values to find an enterprise value by summing up the present value of the projected cash flows and the present value of the terminal value which gives us the DCF value.

EBITDA/ EBITDA multiple

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization. It describe the amount of cash that is generated by a company in a given time period (It's a good indicator of a company's financial performance. removes the effects of factors like interest and depreciation). It is used to establish a value for a company. A multiple is the result of multiplying a number by an integer

more in depth how linked

Each financial stmten tells a differnt aspect of a company's fianancial story. (Ne income) Income stamtent shows the profgabiity of a company in a given period where the net income is added to the statemtn of retaine earnings on the balance shseet. net income is also listed at thee top of the starment of cash lfwo where if we want to find the change in net cash we eare goign to make some cash adjusmnets so before we do tht wee will havee eo put tne income at op of sament of ccash flows. —> income samtent is linked to oher 2 saments hrough net income figure (Cash att beginning of previous year) Cash at the end of he year which is found in statement of cash flows can be found at the top of the balance sheet in current assets section. This is linked to the satemtn of cash flows because when you calcualtethe change in cash over given fnancial period we need cash at the end of the preivous financial period to find cash a beginnign of this period. so previosu year's cash will be used to find cash amount in following year hwich is on top of balance sheet. (Change in cash focus) Statment of cash flows is also linekd to balance sheet and came throgh the cash ittem on statement of cash flow as we calculated the net change in cash over a given financial period and add or subtrac it from the cash at the end of he preivous period and we get the cash at the beginngn of the followng fnacial year. so we simply link the cash on previous year to statment of cash flows to the balance sheet to find he cash in following period and then simply link it back for the following year back ot blalance sheet.

enterprise value

Enterprise Value is the value of an entire company that would be paid for in an acquisition. Enterprise Value is the value of a firm as a whole, to both debt and equity holders. To calculate Enterprise Value in its simplest form, you take the market value of equity (aka the company's market cap), add the debt and the value of outstanding preferred stock, add the value of any minority interests the company owns, and then subtract the cash the company currently holds.

EV/SALES

Enterprise value-to-sales (EV/sales) is a financial valuation measure that compares the enterprise value (EV) of a company to its annual sales. EV-to-sales multiples are usually found to be between 1x and 3x. Generally, a lower EV/sales multiple will indicate that a company may be more attractive or undervalued in the market. (good for analyzing tech stocks rather than using p/e ratio because many tech stocks tend to take earnings an reinvest in themselves so they can grow in future)

equity value

Equity value, commonly referred to as the market value of equity or market capitalization, can be defined as the total value of the company that is attributable to equity investors. It is calculated by multiplying a company's share price by its number of shares outstanding.

What are 3 main financial statements?

Financial statements are a representation of an organization's operations, financial position, and cash flows. The three main financial statements are the Income Statement, the Balance Sheet, and the Statement of Cash Flows. The Income Statement shows a company's revenues, costs, and expenses, which together yield net income. The Balance Sheet shows a company's assets, liabilities, and equity. he cash flow statement shows the amount of cash and cash equivalents entering and leaving a company and breaks the analysis down to operating, investing, and financing activities.

How do you calculate Free Cash Flow and what is it?

Free cash flow (FCF) represents the cash available for the company to repay creditors or pay dividends and interest to investors. Free cash flow is EBIT times 1 minus the tax rate plus Depreciation and Amortization minus Capital Expenditures minus the Change in Net Working Capital

why public policy?

I chose my major because I knew I would be able to gain o learn how to think in an interdisciplinary way and apply my knowledge to real wrold settings, I knew i woul be able to work in teams to problem solve, and I know I would be able to develop analytical skills 1. provided me with broad liberal arts education where I have been able to learn how to think through an interdiscplinary lens and apply knowledge and skills in real-world settings --> good for because I will be exposed to a multi-thinking approach when dealing with real clients and problems 2. work in teams to find the best solutions to society's problems --> good for ib improves ability to solve problems in steam setting and improves communication skills 3. provided me with great analytical skills where I have to learn how to present info and opinion in clear, professional, and concise way with little room for error --> good for ib, will need to make slideshows and spreadsheets with little to no error and will need to be able to consoldiate thoughts clearly let me example: had to create a campaign plan being sent to Durham policymaker where my team was assigned issue of how to address healthier eating habits in a cost efficient way for schools in durham county --> had trouble solving and coming up with idea at first so I suggested we go directly to source which was durham area and residents who have are actually familiar with this issue —> we went directly to source and first went to local elementary school and asked teacher why she thinks nutrition is such large issue in school and she said often times it is much cheaper to putt junk food or frozen food for lunch rather than actual nutritious food like vegetables and fruit, issue is cost of nutritious, fresh food —> we got to thinking and came up with idea to talk to durham residents who supply this sought after nutirotus produce, there so happened to be local durham farmer stand near campus so we spoke to durham country farmer market and spoke to him of different financial burdens of produce and why it is expensive —> found out one financial burden was the cost of storage where often times many of the produce wasn't been being sold because didnt fit grocery store aesthetic —> I remember there was this moment we all looked at each other and had same idea, why doesn't that produce that Is perfectly normal just be given to Durham schools, will be cost effective schools can pay little to no money for produce and will reduce waste and farmers could be incentivized tthrough beeing given financial compensation through new policy solution aimeed at this issue —> had to present policy solution to policy maker with relevant facts and research in a concise, eye-catching document that your policymaker can easily consult to get up-to-speed on the issue, this could even be highly adaptable in covid bring it back to why thesee 3 points are good for IB

Tell me about yourself

I would love to tell you a little bit about myself and the experiences which have led me to be here talking with you today. First off, I'm originally from Long Island, New York, and I applied early to Duke where I loved the passionate spirit and energy of the students and school which I saw through basketball at a young age. Coming into Duke, I was pretty interested in finance and classical studies and was specifically interested in how different cultures and people interact and how these interactions are constantly shaping the world we live. And surprisingly enough I saw a lot of intersections among finance and classical studies in the Public Policy major where I've learned to think about the world holistically in an interdisciplinary framework. I'm also pursuing the finance minor and the innovation & entrepreneurship certificate. On campus, I joined Business Oriented Women where I'm a member of the entrepreneurship committee and have loved thinking creatively among a network of diverse females. Another meaningful opportunity was working with the Detroit BUILD Institute where I loved working so closely with a company and learning how to present and market this business creatively. Moving forward, I recently co-founded Borderless which is an online magazine for Duke International Relations Association, where I am the finance column editor and have loved developing a space for students to engage in current issues. And finally, I started interning with a hedge fund last week, and I'm really grateful and excited for this opportunity to learn more about finance. These experiences have challenged me to work harder, learn more, and think creatively which has helped me develop skills important for the investment banking program which I am really grateful to even be considered for and am excited to be talking with you today.

stock pitch

I would suggest you buy Kroger for the long-term as Kroger has been able to not only been able to outperform during COVID pandemic, but also has many future prospects in the software-space which would allow it further grow within the food consumer space. For background, Kroger is an American grocery store chain. Kroger has been able to survive and out-perform the market during COVID thanks to pandemic-related changes in shopper behavior. After seeing sales grow at a slow pace in recent years, management expects sales growth excluding fuel to accelerate to 13% for the full year, with adjusted EPS up between 45% and 50%. For the fiscal second quarter, total sales increased by 14% year over year excluding fuel, with digital sales surging 127%. Management has been investing to deliver more value and personalized rewards for customers, in addition to stocking more quality products. Kroger also has a 10.92x. These corporate franchises jumped 21% last quarter thanks in part to surging demand for plant-based and organic food products Other advantages for Kroger are its data collection efforts and private label brands, which are quite popular with customers. Kroger's loyalty program provides valuable data and insights about its customers' shopping history. This helps the company make decisions to improve the shopping experience, which management believes is crucial to maintaining its competitive advantage. On the other hand, Kroger is a bit behind its national peers when it comes to its multichannel selling platform. It's clear that Walmart's buy-online-pickup-at-store functionality is a big consumer draw. And Target has shown that shoppers are willing to pay up for ultra-fast fulfillment options. Kroger hasn't yet taken full advantage of these trends to sustainably boost margins and sales growth. But with a P/E of 10.2, investors don't have much to lose. Kroger is a well-managed business with a durable competitive moat. A its current valuation, this value stock could have big upside. If instead you think the retailer has a good sthot at growing its loyal shopper base into 2021, the stock could be a solid deal right now. Sure, Kroger hasn't demonstrated that its past market share struggles are behind it. But it has welcomed millions of new customers since the pandemic began. The retailer has used some of the spoils from that success to pay off debt, reinvest in the business, and accumulate an impressive cash reserve. All those assets should support the stock through a mix of strengthening earnings and increased direct cash returns to investors over the next few years.

If you could use only one financial statement to evaluate the financial state of a company, which would you choose?

I would want to see the Cash Flow Statement so I could see the actual liquidity position of the business and how much cash it is using and generating. The Income Statement can be misleading due to any number of non-cash expenses that may not truly be affecting the overall business. And the Balance Sheet alone just shows a snapshot of the Company at one point in time, without showing how operations are actually performing. But whether a company has a healthy cash balance and generates significant cash flow indicates whether it is probably financially stable, and this is what the CF Statement would show.

who do you know at MS?

IB Eli Gross MD Transportation Group IB Ryan Magee ED of IBD Ankur Bohra ED IBD FIG Jason Choudhry IB Associate TMT Margaret Meyo IB Analyst Dionne Chen: IB analyst Mia Brosius: IB analyst Maria Orme: MD Fixed Income Hillary Peruzzi: VP Wealth Management Christina Cheng: Associate Private Equity

What is an Initial Public Offering (IPO)?

IPO is the acronym for Initial Public Offering. It is the first time a privately-held company sells shares of stock to the public market. Usually a company goes public to raise capital for growing the business or to allow the original owners and investors to cash out some of their investment.

When would you not want to use a DCF?

If you have a company that has very unpredictable cash flows, then attempting to project those cash flows and create a DCF model would not be effective or accurate. In this situation you will most likely want to use a multiples or precedent transactions analysis.

what does an investment banker do?

Investment bankers offer an array of services. Some bankers specialize in raising capital for companies through debt or equity offerings. Others may focus on providing advice and valuation services to a company involved in a merger or acquisition. The area that interests me most, especially at firm X and in this market, is financial restructuring. I feel that the deal flow in this group, in this economy, would be steady and I would get a lot of live deal experience in my first year. Raising capital through debt or equity offerings. o Providing advice to companies on mergers and acquisitions. o Financial restructurings. o Valuation work and pitching the bank's expertise to companies looking for help o At senior levels, focusing on clients and building relationships that can generate deal flow o At the junior and middle levels, focusing on executing the given service at the highest level of quality possible to ensure repeat business

How would a $10 increase in depreciation expense affect the three financial statements?

Let's start with the Income Statement. The $10 increase in depreciation will be an expense and will reduce net income by $10 times (1-the tax rate). Assuming a 40% tax rate, this will mean a reduction in net income of 60% or $6. So $6 flows to cash from operations, where net income will be reduced by $6 but depreciation will increase by $10, resulting in an increase of ending cash by $4. Cash then flows onto the Balance Sheet where it increases by $4, PP&E decreases by $10, and retained earnings decreases by $6, keeping everything in balance.

Which will often result in the highest valuation?

Most of the time precedent transaction valuation will result in the highest valuation due to the inclusion of a "control premium" which reflects what the acquirer had to pay to control the target in the acquisition.